a

GAO

United States Government Accountability Office

Report to the Committee on Banking, 

Housing, and Urban Affairs, U.S. Senate

November 2005 INTERNATIONAL 

REMITTANCES

Information on 

Products, Costs, and 

Consumer Disclosures

GAO-06-204
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November, 2005

INTERNATIONAL REMITTANCES

Information on Products, Costs, and 

Highlights of GAO-06-204, a report to the Consumer Disclosures 

Committee on Banking, Housing, and 

Urban Affairs, U.S. Senate 

Remittances are personal funds 

immigrants send to their home 

countries. The United States is the 

largest remittance-sending country 

in the world, with more than $36

billion remitted in 2003, according 

to the International Monetary 

Fund. The majority of these

remittances are sent to Latin 

America and the Caribbean and

they are a very important source of

financial flows to many countries.

In 2004, the United States, with

other countries, pledged to reduce 

fees for remittances. Remittance 

senders in the United States can 

send funds through entities in the 

formal financial sector such as

money transfer operators, banks, 

and credit unions or other informal

means such as couriers. This report 

provides information on (1) the

methods of transmission available 

to remittance senders in the formal

financial sector and the advantages

and disadvantages of each, (2) the 

costs to send remittances through 

the formal financial sector, and (3)

disclosures remittance providers 

typically provide to senders.

Remittance senders in the United States have a range of methods available 

including money transfer operators (MTOs), banks, credit unions, and the 

United States Postal Service. However, most transactions occur through 

MTOs. These products range from cash-to-cash wire transfers to accountbased transfers, stored value cards, and Internet-based transactions. There

are a number of reasons remittance senders continue to choose MTOs over 

other providers, including their extensive networks and customers’ 

familiarity with their products. Banks and credit unions offer some products 

at lower cost and the advantage of access to other financial services. 

However, limited banking hours, language barriers, or inconvenient 

locations may make it difficult for some remittance senders to use these 

services. Recently, some federal banking agencies have undertaken 

initiatives to move more remittances through banks and credit unions and 

bring these senders into the financial mainstream.

Research shows that competition in the remittance market has resulted in a 

drop in the cost of remittances from the United States to Latin America and 

the Caribbean. The standard costs to a remittance sender are the transfer fee

and the foreign exchange conversion fee. The costs vary for different 

products. For example, on average, most providers we spoke with charge 

approximately $10 to send $300 to Mexico using the cash-to-cash method, 

while providers charge less for products such as dual-ATM cards. 

Disclosures we reviewed from remittance providers included information on

the transfer fee, the exchange rate, and the right to a refund. The way this 

information is presented varies by provider, and a sender may have to do 

additional work to compare costs across different providers. Some efforts 

are under way to provide consumers with more aggregate information on the 

cost of remittances across different providers and products. 

Regional Destinations of Workers’ Remittances Sent from the United States, 2003 

www.gao.gov/cgi-bin/getrpt?GAO-06-204.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Yvonne Jones, 

(202) 512-2717, JonesY@gao.gov. 
Page i GAO-06-204 International Remittances

Contents

Letter 1

Results in Brief 3

Background 5

Remittance Senders Have a Variety of Options Available to Send 

Remittances but Continue to Predominantly Use MTOs for 

Multiple Reasons 8

Standard Costs for Sending Remittances to Certain Regions of the 

World Have Fallen, but These Costs Vary among Providers and 

Products 22

Although State and Federal Disclosure Requirements Vary, 

Remittance Providers Offer Basic Information on Cost and Error 

Resolution 34

Observations 44

Appendixes

Appendix I: Objectives, Scope, and Methodology 47

Appendix II: Description of Products That Are Offered by Providers We 

Interviewed 52

Appendix III: Transfer Fees to Mexico and the Philippines for the 

Providers We Interviewed 56

Appendix IV: GAO Contact and Staff Acknowledgments 58

Tables Table 1: Remittances as a Percentage of Various Economic 

Indicators for Selected Countries for 2003 6

Table 2: Remittance Providers and the Different Product Types 

They Offer 9

Table 3: Average Transfer Fees to Send $300 to Mexico and the 

Philippines for Cash-to-Cash-Based Product Offered by the 

Providers 25

Table 4: Range of Transfer Fees to Send $300 to Mexico and the 

Philippines for All Remittance Products Offered by the 

Providers 27

Table 5: States Reviewed That Required a Receipt 38

Table 6: States Reviewed That Specify Disclosure Requirements for 

Error Resolution 39

Table 7: Description of Remittance Products Offered by Providers 

We Interviewed 52

Table 8: Product Costs of Providers We Interviewed 56
Contents

Page ii GAO-06-204 International Remittances

Figures Figure 1: Regional Destinations of Workers’ Remittances Sent from 

the United States, 2003 7

Figure 2: Cash-to-Cash Remittance Transaction 10

Figure 3: Account-Based Remittance Transaction 12

Figure 4: ATM-Based Remittance Transaction 13

Figure 5: Stored Value Card Remittance Transactions 14

Figure 6: Hawala System for Remittances 17

Figure 7: The Total Cost of a Remittance Transfer as a Percentage 

of the Amount Sent by Industry Sector for 14 Latin 

American and Caribbean Countries, 2001-2004 24

Figure 8: The Average Percentage Difference in Exchange Rate 

from the Central Bank Rate Offered by Five MTOs, 

June-July 2005 29

Figure 9: The Exchange Rate Offered by the Six Providers and the 

Central Bank of Mexico, June-July 2005 30

Figure 10: The Exchange Rate Offered by the Six Providers and the 

Central Bank of the Philippines, June-July 2005 31

Figure 11: The Exchange Rate Spread among Various Remittance 

Providers to 14 Latin American and Caribbean Countries, 

2001-2004 32

Figure 12: An Example of a Cash-to-Cash Receipt 35
Contents

Page iii GAO-06-204 International Remittances

Abbreviations

ACH Automated Clearing House

BSA Bank Secrecy Act

CUNA Credit Union National Association

DFID Department for International Development

EFTA Electronic Funds Transfer Act of 1978

FinCEN Financial Crimes Enforcement Network

FDIC Federal Deposit Insurance Corporation

ICBA Independent Community Bankers of America

IDB Inter-American Development Bank

IMF International Monetary Fund

IRnet International Remittances Network

MTO money transfer operator

NATF New Alliance Task Force

NMTA National Money Transmitters Association

PROFECO Procuraduria Federal del Consumidor

USPS United States Postal Service

WOCCU World Council of Credit Unions, Inc.

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-06-204 International Remittances

United States Government Accountability Office

Washington, D.C. 20548

A

November 17, 2005 Letr

The Honorable Richard C. Shelby

Chairman

The Honorable Paul S. Sarbanes

Ranking Minority Member

Committee on Banking, Housing,

and Urban Affairs

United States Senate

According to the International Monetary Fund (IMF), in 2003, personal 

remittances amounted to about $100 billion for developing countries. 

These personal remittances can be used for various purposes including 

basic consumption, housing, education, and small business formation. The 

United States is the largest remittance-sending country in the world. 

According to the IMF, in 2003, more than $36 billion was sent from the 

United States to other countries. The majority of these funds were sent to 

Latin America and the Caribbean, and substantial amounts were also sent 

to Asia and Africa. These personal remittances also serve as an important 

financial source for some countries. For example, the Inter-American 

Development Bank estimated that in 2003 remittances to Latin America and 

the Caribbean exceeded all combined foreign direct investment and official 

development assistance to the region, and accounted for at least 10 percent 

of gross domestic product for six countries in the region.

Community groups and some U.S. government officials have raised 

concerns that remittance senders pay excessive fees to send funds to their 

home countries. The United States and other major industrialized nations 

committed in 2004 at the Sea Island Summit of G8 countries to lead an 

international effort to reduce remittance fees.1

 Another concern raised by 

community groups is that remittance senders are not obtaining sufficient 

information on the total cost of the remittance transaction and their rights 

to dispute transactions. Finally, some federal banking agencies, members 

of Congress, and community groups have expressed interest in exploring 

ways to bring a greater percentage of immigrants into the mainstream 

1

The Group of 8 (G8) is a group of eight countries: Canada, France, Germany, Italy, Japan, 

Russia, the United Kingdom, and the United States. The G8 Summit brings the heads of state 

or government of these countries together on an annual basis to deal with the major 

economic and political issues facing their domestic societies and the international 

community as a whole. Representatives from the European Union are also involved in the 

meetings.
Page 2 GAO-06-204 International Remittances

financial system, such as by encouraging remittance senders to use banks 

or credit unions to send remittances.

Remittance senders in the United States have a variety of options to 

transfer money to their home countries. Senders can use the formal 

financial sector, which includes money transfer operators (MTOs), such as 

Western Union and MoneyGram, as well as banks and credit unions. They 

may also choose the informal financial sector, using options like personal 

couriers and hawalas—an Arabic word that means “transfer”—to send 

funds.2

 Our work focused primarily on remittances sent through the formal 

financial sector.

In light of the large volume of remittances and the need for better 

understanding of these flows and the methods that remittance senders use, 

you asked us to undertake a review of remittances from the United States. 

Specifically, we examined (1) the methods of transmission available to 

remittance senders and the advantages and disadvantages of each, (2) the 

various costs to the remittance sender to use different methods, and (3) 

information remittance providers disclose to senders and the federal and 

state disclosure requirements. You also asked us to review available 

estimates on remittances from the United States, which we plan to address 

in a separate report. 

To examine the methods of transmission available to remittance senders, 

we developed a set of structured questions and used them to interview 

selected MTOs, banks, credit unions, and Internet-based remittance 

providers. We spoke with and reviewed documentation from a total of 28 

remittance providers. To examine the various costs to the remittance 

sender to use different methods, we asked the remittance providers we met 

with for the transfer fees and any additional fees to send $300, primarily to 

Mexico and the Philippines, which are among the largest recipients of 

remittances from the United States. To examine what information 

remittance providers disclosed to remittance senders, we asked the 

providers what they provided to remittance senders during a remittance 

transaction and also collected and reviewed documentation they provided 

to us such as receipts, brochures, and terms and conditions they provide to 

2

Hawalas are one type of informal value transfer system often used in places where formal 

financial transactions are unavailable, expensive, or unreliable. There are different words 

for similar informal funds transfers in other countries—fei-ch’ien (China), hui kuan (Hong 

Kong), hundi (India), padala (Philippines), and phei kwan (Thailand).
Page 3 GAO-06-204 International Remittances

consumers. We also reviewed federal and selected state laws to determine 

disclosure requirements for various remittance products. Appendix I 

provides additional details on our scope and methodology. We conducted 

our work from December 2004 to October 2005 in accordance with 

generally accepted government auditing standards.

Results in Brief Remittance senders in the United States have a range of methods to send 

money abroad, including money transfer operators, banks, credit unions, 

and the U.S. Postal Service. However, most transactions in the formal 

financial sector–the scope of this report—are conducted through MTOs. In 

the formal financial sector, mechanisms and products for transferring 

money offered by remittance providers range from more traditional cashto-cash wire transfers to account-based transfers, stored value cards, or 

Internet-based transfers. In the informal sector, remittance senders may 

use couriers or hawalas, which generally transfer funds outside of the 

formal financial sector. There are a number of possible reasons remittance 

senders continue to choose MTOs over other providers, including the 

extensive network large MTOs have both in the United States and abroad, 

as well as customers’ familiarity with the products MTOs offer. 

Additionally, even though the fees remitters incur when using an MTO may 

be higher than the fees incurred when using other providers, remitters may 

choose an MTO because it has a name they trust and may offer the 

convenience of service 24 hours a day. Banks and credit unions offer 

remittance senders the benefits of deposit insurance and access to other 

banking products, but limited banking hours, language barriers, and 

inconvenient locations may make it difficult for them to use this service. 

Two federal banking agencies have undertaken some new initiatives in an 

effort to move more remittances through formal financial institutions and 

bring more immigrants into the financial mainstream.

Research shows that competition in the remittance market has resulted in a 

drop in the cost to send remittances from the United States to certain 

regions of the world. For example, according to the Inter-American 

Dialogue, the cost of sending remittances from the United States to Latin 

America (particularly Mexico) has fallen since around 2001 and, more 

specifically, since 2003, the average cost of sending $250 has fallen from 

12.5 percent to 7 percent.3

 However, the cost reductions have stabilized 

3

The Inter-American Dialogue is a center for public policy analysis, exchange, and 

communication on issues in Western Hemisphere affairs.
Page 4 GAO-06-204 International Remittances

recently. Little is known about the trends in costs of remittances from the 

United States to other regions of the world. The standard costs to 

remittance senders are the transfer fee and the foreign exchange 

commission, which is the fee to convert currency. These costs vary for 

different products and providers. In our review of products from 28 

remittance providers, we found that the transfer fee could differ based on 

provider and product used, the amount sent, and the destination. However, 

the MTOs, banks, credit unions and the U.S. Postal Service with whom we 

spoke that offered the predominant cash-to-cash product, had similar 

transfer fees to send $300 to Mexico, charging approximately $10. 

Additionally, banks offered lower-cost alternatives to send remittances, 

such as card-based products or account-to-account-based products. For 

example, the transfer fee to use a dual ATM card to send remittances to 

Mexico could be as low as $1.50. The foreign exchange commission can 

also vary according to factors, such as the provider and product used or the 

level of competition among sending agents. The results of an Internet 

tracking exercise we conducted with five MTOs and one bank showed that 

in general the foreign exchange commissions were lower to Mexico than to 

the Philippines. Depending on the provider, product, and service used, 

remittance senders may incur additional costs such as those associated 

with maintaining a bank account or fees for home delivery. 

Providers we met with generally presented remittance senders with basic 

information on the transaction fee and the exchange rate that would be 

applied to the transaction, as well other terms and conditions of the 

transaction, such as a customer’s right to a refund. The way in which 

information was presented varied among providers. Receipts we examined 

from MTOs, banks, credit unions, and the U.S. Postal Service that offered 

the cash-to-cash product consistently provided the transfer fee, exchange 

rate, amount of local currency to be received, as well as information on 

error resolution, at the time of the transaction. Banks that offered other 

remittance products, such as account-based transfers, including dual ATM 

cards, presented disclosures in various ways, such as in a fee schedule 

given to customers when they opened an account or on a monthly 

statement. Additionally, disclosure requirements vary based on whether the 

provider is regulated at the state or federal level, as well as the type of 

remittance product offered to the customer. MTOs are generally regulated 

at the state level, and each state may set its own disclosure requirements. 

For example, California’s law requires its MTOs to be licensed and 

stipulates specific information that must be contained on receipts for each 

transaction regarding cost and a right to a refund. Montana, on the other 

hand, has no specific money transmitter laws. In contrast, banks and credit 
Page 5 GAO-06-204 International Remittances

unions are subject to a specific federal disclosure law. However, some 

banks we spoke with told us that they believed this law did not apply to all 

of their remittance products, such as stored value cards. While information 

on the cost of the remittance transaction is available to remittance senders, 

they may have to do additional work to compare costs across different 

types of remittance products because of various fees and types of 

disclosures. Although there was no consensus among the officials we 

spoke with on whether customers need additional disclosure information 

to make informed decisions, efforts are under way to provide some 

customers with more aggregated information on the cost of remittances 

across different providers and products. For example, the Mexican 

consumer protection agency publishes information on the Internet, on 

transfer fees and exchange rates offered by a cross section of providers 

sent to Mexico from nine cities in the United States.

We make no recommendations in this report. We requested and received 

technical comments on relevant sections of a draft of this report from the 

Bureau of Economic Analysis, the Federal Deposit Insurance Corporation, 

the Federal Reserve Bank of Atlanta, the United States Postal Service, and 

the National Credit Union Administration. 

Background Remittances have become an important source of financial flows to 

developing regions. For some countries, these funds constitute the single 

largest source of foreign exchange and can often rival foreign direct 

investment. Table 1 shows that remittance flows for selected countries 

exceed flows of various economic indicators such as official development 

assistance, foreign direct investment, and gross national income.
Page 6 GAO-06-204 International Remittances

Table 1: Remittances as a Percentage of Various Economic Indicators for Selected 

Countries for 2003

Source: World Bank.

Notes: Remittances comprise workers’ remittances and compensation earned by nonresident 

employees. The countries selected are some of the top recipients of remittances in their respective 

regions.

The United States has historically served as an important destination for 

immigrants as they seek to improve their economic conditions. According 

to the 2000 U.S. Census, the 1990s saw the largest increase in the foreignborn population in the United States. These immigrants from various parts 

of the world have traditionally sent personal remittances back home to 

help family members pay for basic necessities. As figure 1 shows, the 

majority of remittances from the United States flow to Latin America and 

the Caribbean, which includes Mexico, Central America, South America, 

and the Caribbean. This figure also shows that a large amount flows to 

Asia, including the Philippines. 

Country

Remittance as a

percentage of official

development

assistance

Remittance as a

percentage of foreign

direct investment net

inflows

Remittance as a

percentage of gross

national income

Dominican 

Republic 3,372 750 13

India 1,847 408 3

Mexico 14,148 135 2

Philippines 1,069 2,470 9
Page 7 GAO-06-204 International Remittances

Figure 1: Regional Destinations of Workers’ Remittances Sent from the United 

States, 2003

As the amount of remittances from the United States has grown over time, 

more providers beyond the traditionally large MTOs have entered the 

remittance market. For example, small providers that serve specific 

remittance corridors (e.g., Chicago to a specific region of Mexico) have 

started offering remittances. Further, banks and credit unions, in their 

efforts to attract more immigrant clients, particularly Latinos, have 

attempted to use remittances as a vehicle to attract these potential clients. 

Finally, remittance firms on the Internet have also entered the market.

The regulation of remittance providers is done at both the state and the 

federal level. MTOs are required to register with the Department of the 

Treasury and prepare and maintain a list of their agents. MTOs in some 

states are examined for financial soundness by state regulators and are 

0 5 10 15 20 25 30 35 40 45

Central

America

Caribbean

South

America

Asia

Europe

Africa

North

America

Oceania

Latin

America

and the

Caribbean

(Philippines)

(Mexico)

(Eastern)

Percentage

Source: GAO estimates based on underlying Bureau of Economic Analysis tabulations.
Page 8 GAO-06-204 International Remittances

subject to examinations by the Internal Revenue Service for compliance 

with the Bank Secrecy Act (BSA), a federal anti-money laundering law. 

Banks and credit unions are generally regulated by either federal or state 

banking regulators for both financial soundness and compliance with the 

BSA.

Remittance Senders 

Have a Variety of 

Options Available to 

Send Remittances but 

Continue to 

Predominantly Use 

MTOs for Multiple 

Reasons

Remittance senders in the United States have a number of methods and 

product options available to them when sending money to their home 

countries through the mainstream financial sector. However, many 

continue to use MTOs for a number of reasons. A remittance sender in the 

United States can send money through formal financial channels, such as 

banks, credit unions, or MTOs. These different providers offer traditional 

remittance products like cash-to-cash transfers and account-based 

transfers, as well as newer products like stored value cards. Remittance 

senders can also use informal value transfer systems to transfer money, 

such as personal couriers and hawalas. Each type of remittance provider 

and product has its own advantages and disadvantages. For example, most 

banks and credit unions we spoke with that offer remittance services only 

send to Latin American countries, with the majority of those sending to 

Mexico. Thus, a remittance sender might gain the security of using the 

mainstream financial sector, but the receiving countries available to the 

sender may be limited. An MTO may have a wider distribution network but 

may charge a higher fee for this service, especially for countries where 

there is relatively little competition. Remittance senders nevertheless 

continue to use MTOs because of factors such as convenience and trust. In 

an effort to move more remittances through mainstream financial 

institutions such as banks and credit unions and bring immigrants into 

these institutions, some federal banking agencies have undertaken 

initiatives to encourage remittance senders to use banks or credit unions to 

send remittances. 

Remittance Senders Have a 

Variety of Formal and 

Informal Methods to 

Transfer Funds

There are a number of different types of providers inside and outside the 

formal financial sector offering remittance services. Traditionally, MTOs 

have dominated the remittance industry in the formal financial sector. 

Recently though, more banks, credit unions, and Internet-based providers 

have started offering remittance services to customers. As more remittance 

providers enter the market, the range of products has also expanded. Table 

2 shows the types of products that may be offered by the different types of 
Page 9 GAO-06-204 International Remittances

formal providers. Appendix II has a more thorough description of the 

products offered by the providers we spoke with.

Table 2: Remittance Providers and the Different Product Types They Offer

Source: GAO. 

Money transfer operators Traditionally, MTOs have dominated the remittance industry in the formal 

financial sector. One recent estimate from a private research firm states 

that the four largest MTOs sent approximately 40 percent of remittances 

from the United States.4

 Larger MTOs in the United States may serve 

upward of 170 countries, while some small MTOs may serve only one 

country or region. 

Generally, a sender can walk into an MTO, provide cash to cover the 

transfer amount and fees, provide basic identification information for 

themselves and the recipient (most often a name, address, and phone 

number), and the money will be wired to a specified agent location in the 

recipient’s country. This type of transaction is referred to as a cash-to-cash 

transaction because a sender provides cash to the money transmitter and 

the receiving agent pays out cash to the remittance recipient in either U.S. 

dollars or local currency.5

 Figure 2 shows how this process operates. 

Cash-to-cash

Cash-toaccount

Account/ 

credit card-tocashAccount-toaccount ATM productStored value 

card Money order

MTOs X X X (via an online transfer)

X X

Banks X X X X X X

Credit unions X X X

USPS X X

Internet-only 

providers

X X

4

Schatt, Dan, “Global Money Transfers: Getting the Formula Right When High-Tech Meets 

High Touch,” Celent (March 2005). 

5

Some countries, such as Ecuador, have a U.S. dollar-based economy so a recipient can only 

receive U.S. dollars. Some other countries allow for payout in local currency or U.S. dollars. 
Page 10 GAO-06-204 International Remittances

Figure 2: Cash-to-Cash Remittance Transaction

MTOs provide a variety of places to send or receive cash. The majority of 

MTO users initiate cash-to-cash transactions at an MTO-dedicated 

storefront or an affiliated agent. Examples of the latter include 

convenience stores, supermarkets, check cashers, and ethnic-run retail 

stores.6

 One MTO we spoke with has moved away from this model in favor 

of a branch-based system where the company runs all its remittance 

branches and does not have any contracted agents. All of the branches are 

located in areas where Latinos live and work. A company official told us 

the company moved toward this model because it allows greater flexibility 

in its pricing structure, and the company can pass additional savings on to 

the customer. Other sending and receiving options offered by MTOs 

include:

• Cash-to-account—This is a relatively uncommon option in which some 

MTOs have formed partnerships with banks that allow the sender to pay 

in cash and have the funds deposited in the recipient’s bank account. 

Money transfer

company's agent

and point of sale

Money transfer

company's headquarters

$200

Remittance

sender

Money transfer Agent distributor's bank

company's bank

Money transfer

company's agent

and point of sale

$200$200

Remittance

recipient

(local currency)

United States

Remittance money

$200

$200

Wire transfer

Sources: GAO (analysis); Art Explosion (images).

Country B

business account

$200

or

Compliance screening

Fee

+

6

These agents receive a commission from each transaction they process. The contracts 

between the MTO and the individual agents specify if they must follow a fee schedule 

provided by the MTO, if they can set their own exchange rate, and if they can charge 

additional fees for the transaction.
Page 11 GAO-06-204 International Remittances

One provider we spoke with offers a cash-to-account product to the 

Philippines. This service allows U.S. dollars to be transferred to the 

recipient’s bank account. 

• Web sites—Some MTOs have Web sites where customers can initiate a 

remittance over the Internet, pay for the transaction with a credit card, 

and the payout would be received in cash at a corresponding agent 

location. The MTOs we spoke with that offer transfers over their Web 

sites said a very small volume of their transactions is conducted this 

way. 

• Money orders—Some MTOs we spoke with also sell money orders that 

could be used as remittance products. The sender purchases the money 

order with U.S. dollars and sends it to the recipient, who then cashes it 

in at a bank for local currency. 

Most MTOs we spoke with offering cash-based transactions (for example, 

cash-to-cash) said that the money is available to the recipient within 24 

hours, and some MTOs offer a same day transaction for a higher fee. While 

most recipients usually retrieve remittances at the provider’s place of 

business, sometimes the money can be delivered to the recipient’s home.7

Some MTOs also offer a free 3-minute international phone call to senders 

so they can inform the recipient the money has been sent and one provider 

we spoke with will send a text message to the recipient’s mobile phone 

alerting them that the money has been sent.

Banks Both large and small banks have entered the remittance market in an effort 

to attract immigrants as a new client base. Researchers, as well as officials 

from the Federal Reserve, estimate that banks accounted for about 5 

percent of all international remittances sent from the United States in 2004. 

Traditionally, banks have wired money from a customer’s account to a 

recipient’s account as the primary method for transferring money abroad. 

This was not marketed as a remittance product, and banks targeted this 

option at high-volume account holders who send large sums of money for 

retail or investment purposes, and they generally charge more than the cost

7

There is usually an additional charge for home delivery, and it is not available in all 

countries. In some locations where it is offered, delivery staff travel in unmarked vehicles in 

an effort to avoid becoming victims of robbery. 
Page 12 GAO-06-204 International Remittances

of a remittance transfer.8 Most U.S. banks we identified offering remittance 

products and services do so only for Latin America, with a few also serving 

India and the Philippines. Some banks have developed their own 

remittance products, such as account-based products, which usually 

require the sender, and in some cases the receiver, to have an account. For 

account-based products, as shown in figure 3, the money is transferred 

from the sender’s account to the recipient’s account (account-to-account) 

or it is paid out in cash (account-to-cash). Banks offering account-based 

products usually transfer the money to branches they have abroad or to 

banks with which they have formed partnerships. 

Figure 3: Account-Based Remittance Transaction

Some of the larger banks we spoke with have recently acquired Mexican 

banks, providing them with an instant distribution network for remittances. 

Banks also offer other remittance options, such as traditional remittances 

paid for with cash, dual ATM cards, or stored value cards. The cash-based 

products operate in a manner similar to that described above. Like cash-toaccount or account-to-account products, a dual ATM card is linked to a 

customer’s bank account. A recipient could withdraw the money from a 

special remittance account linked to the sender’s regular bank account or 

directly from the sender’s regular bank account or directly from the 

8

Most banks charge around $40 to wire money internationally.

Request to have $200

transferred from personal

account to remittance recipient's

personal bank account

Remittance

sender

Remittance sender's bank Remittance recipient's bank

$200

$200 deposit receipt

(receipt in local currency

is also possible)

Remittance

recipient

United States

$200 Money transfer between bank accounts

Sources: GAO (analysis); Art Explosion (images).

Country B

$200 deposit in

remittance recipient's

bank account

$200 withdrawal from

remittance sender's

bank account

Fee

+
Page 13 GAO-06-204 International Remittances

sender’s savings or checking account. If the money is withdrawn from a 

separate remittance account, the senders can either transfer funds from 

their accounts into the remittance account or make a deposit directly into 

the remittance account. We spoke with five banks that are offering a dual 

ATM product. Three of these banks limit the amount that can be 

transferred on a daily basis through them to $200 or $400 as a security 

precaution, since they are linked to a customer’s account. As shown in 

figure 4, a remittance sender using this type of product sends an ATM card 

to the receiver, who can then use it to withdraw money at a local ATM. 

Figure 4: ATM-Based Remittance Transaction

With stored value cards, as shown in figure 5, senders purchase a card from 

a bank for a certain dollar amount, which is posted to the card before it is 

sent to the recipient. This card can also be used to withdraw money from 

an ATM or used as a point-of-purchase card to buy goods. The card may be 

reloaded with more funds and is usually branded by one of the major credit 

card issuers. Three of the 12 banks we spoke with that offer remittance 

services are offering a stored value card. According to one researcher we 

spoke with, account-based remittances currently constitute a small part of 

the total remittance flows leaving the United States, as many immigrants 

lack bank accounts, are not aware of the products or the technology, or 

their banks do not offer the service. Two banks we spoke with told us they 

have opted to act as agents of an MTO and provide cash-to-cash services 

because this is a low-cost way for them to enter the remittance market. 

Another bank we spoke with is considering this option because of the low 

level of interest in the other remittance products it offers. Furthermore, 

Sources: GAO (analysis); Art Explosion (images).

Remittance

sender

Remittance sender's bank

ATM

Remittance

recipient

United States Country B

Special remittance account

(linked to sender's bank account)

ATM

ATM

Duplicate ATM card

sent to remittance recipient

$$$

(local

currency)
Page 14 GAO-06-204 International Remittances

one community bank told us it has allowed an MTO to open a kiosk in its 

branch because it does not have the resources to offer its own remittance 

services, and it want to meets the needs of its customers. 

Figure 5: Stored Value Card Remittance Transactions

Credit Unions Credit unions have entered the remittance market in an effort to meet the 

needs of some of their immigrant clients for lower-cost remittance 

products and possibly attract new members. Many credit unions in the 

United States offering remittances do so through an electronic platform 

developed by the World Council of Credit Unions, Inc. (WOCCU) called the 

International Remittances Network (IRnet).9

 IRnet provides credit unions 

access to the means by which they can offer remittance services. On the 

sending side, WOCCU has contracted with two MTOs to serve as the 

transmitter of account-to-account, account-to-cash, or cash-to-cash 

remittances for IRnet participant credit unions. A credit union that joins 

IRnet can choose which MTO’s services it would like to offer to its 

members. WOCCU officials told us they provide a choice of MTO to each 

credit union in an effort to offer remittance senders and receivers more 

options for transferring and receiving funds. Remittance senders using an 

IRnet participating credit union can send money to countries in Latin 

America, Asia, Africa, Europe, and Australia. According to WOCCU, as of 

Remittance

sender

Bank offering stored value card

SVCSVC

Remittance recipient

United States

Sources: GAO (analysis); Art Explosion (images).

Country B

SVC

SVC sent to

remittance recipient

Stored value card (SVC)

purchased from bank

(initial balance: $200)

SVC can be used like an ATM card

or as a point-of-purchase card to buy goods

$$$

$200

or

Fee

+

(local

currency)

9

The World Council of Credit Unions, Inc., is an international membership organization for 

credit unions. WOCCU has members and affiliates in 91 countries. 
Page 15 GAO-06-204 International Remittances

August 2005, there were 174 credit unions that were members of IRnet, the 

majority of which were located in California and Texas. 

Many of the credit unions we spoke with said that remittances are not a 

significant part of their business. For example, of the seven credit unions 

we spoke with, one reported that it conducted more than 250 remittance 

transactions a month through IRnet in 2004 and another reported 

conducting around 80 transactions a month. The other five credit unions 

we spoke with reported conducting fewer than 25 transactions a month in 

2004 with some fewer than 15 transactions for the year. 

United States Postal Service The United States Postal Service (USPS) provides remittance services 

abroad through international money orders and cash-to-cash wire 

transfers. Remittance senders can mail international money orders to 30 

countries, many of which are sent using USPS’s international mail services. 

Recipients can then cash these money orders either at their destination 

country’s local post office or at banks in destination countries, depending 

upon the acceptance policies of those post offices and banks. In 1996, 

USPS entered into a partnership with the Mexican bank Bancomer (now 

BBVA Bancomer) to offer a wire transfer service called Sure Money, 

branded Dinero Seguro at participating post offices. The service mirrors 

traditional money transfer operations, with cash being wired from U.S. post 

offices to financial institutions that BBVA Bancomer has entered into 

agreements with, including, but not exclusive to, BBVA Bancomer 

branches. In order for the recipient to access the money, the sender must 

provide him with the confirmation number and the recipient must provide 

proper identification upon pickup of the funds at the participating payout 

agent. The recipients are not required to have an account with BBVA 

Bancomer or any of the payout agents to collect funds. In 2004, USPS 

expanded Dinero Seguro to nine additional countries also in partnership 

with BBVA Bancomer.10

Online Providers Recently, some Internet-based money transfer companies have begun 

offering remittance services. Unlike traditional MTOs that might allow 

customers to send money through their Web sites, these MTOs operate 

solely online and do not have agents or branches. Remittances initiated at 

an online provider must be paid for with a credit or debit card. On the 

recipient end, the money is disbursed to either a stored value card or in 

10In addition to operating in Mexico, Dinero Seguro operates to Argentina, Columbia, the 

Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, and Peru. 
Page 16 GAO-06-204 International Remittances

cash at a correspondent agent location. We spoke with officials of one 

online provider who told us they entered the business because they felt 

they could offer a competitive advantage over physical providers with a 

lower-cost product and greater convenience. While online remittance 

providers currently have a small share of the market, a 2005 report on 

remittances and technology from a communications firm projects that by 

2007, more than 5 million foreign-born households will do some form of 

online banking and at least half of these will use an online transfer or cardbased product for remittances.11 

Hawalas and Courier Services Some remittance senders choose not to send money through formal 

financial channels. It is difficult to gather information about these informal 

money transfers, since some of them occur through cultural arrangements 

with little or no documentation. Informal value transfer systems are often 

used in places where formal financial transactions are unavailable, 

expensive, or unreliable. Two common types of informal value transfer 

systems are courier services and hawalas. Courier services carry funds 

across the border often along with other goods. The courier may handdeliver the money to the recipient or may have a storefront where the 

recipient can retrieve it. According to one study on the United StatesMexico remittance corridor, couriers play a significant role in transferring 

money between the residents in the two countries.12 The hawala system 

operates differently. As shown in figure 6, a customer using a hawala would 

hand cash to the hawaladar and request that an equivalent amount be 

delivered in local currency to the recipient. The hawaladar would then 

contact a hawaladar in that receiving country and ask that the funds be 

disbursed to the recipient. In most cases, no fees are discussed. Rather, the 

transaction cost is factored into the quoted exchange rate or the amount 

that will be delivered to the recipient. Remittances sent through hawalas 

are delivered anywhere from within a few minutes to 48 hours, depending 

upon the urgency and destination of funds. While the hawala system 

operates in the informal sector, hawaladers often hold bank accounts and 

use the formal financial channels to settle their outstanding balances. 

11Schatt, Dan, “Global Money Transfers: Getting the Formula Right When High-Tech Meets 

High Touch,” Celent (March 2005).

12Hernandez-Cos, Raul, “The U.S.-Mexico Remittance Corridor: Lessons on Shifting from 

Informal to Formal Transfer Systems,” The World Bank (February, 2005).
Page 17 GAO-06-204 International Remittances

Figure 6: Hawala System for Remittances

Remittance Providers in the 

Formal Sector Have Their 

Advantages and 

Disadvantages, yet MTOs 

Remain the Dominant 

Choice of Provider 

There are advantages and disadvantages to the remittance sender of using 

each type of provider in the formal sector. Factors such as trust in the 

provider, speed of transaction, reliability and security of the transaction, 

and cost were all cited by remittance providers and a limited group of 

senders we spoke with as reasons thought to be important to a remittance 

sender when choosing a provider and product. Most remittance senders 

first choose the provider and then choose a product type offered by that 

particular provider. Remittance senders, though, may be limited in their 

choice of provider based on the convenience and accessibility of the 

payout location for the recipient. 

Remittance providers we spoke with said that there are a number of 

possible reasons remittance senders continue to choose MTOs over other 

providers. For example, MTOs have established extensive networks both in 

the United States and abroad that allow them to initiate transactions and 

distribute money in and throughout more countries than any other type of 

provider. Some of the largest MTOs we spoke with told us they have 

between 75,000 and 225,000 agent locations worldwide in more than 170 

countries. The large numbers of agent locations, including convenience 

stores, grocery stores, check cashers, and ethnic-run retail stores provide 

the remittance sender with more locations from which to send funds and 

may better equip MTOs to deliver money in rural areas than other types of

Hawaladar

$200

Remittance

sender Hawaladar

$200$200

Remittance

recipient

(local currency)

United States

Sources: GAO (analysis); Art Explosion (images).

Country B

$200

Communication and

acceptance of request

Eventual account imbalances may be

settled through the formal banking system

Fee

+
Page 18 GAO-06-204 International Remittances

providers. Six of the 10 MTOs we spoke with said that customers prefer to 

use them because they have multiple sending or receiving locations. MTOs 

also offer convenient hours of operation and locations and some may offer 

service 24-hours a day. Of the 10 MTOs we spoke with, half identified 

convenient hours of operation as a reason a consumer uses them. In 

addition, MTOs offer relatively quick and reliable transactions. Many MTOs 

we spoke with said their cash-to-cash transaction—the most common one 

they offer—is available within a few hours, and some said within a few 

minutes. Some MTOs also offer a free 3-minute international phone call to 

senders so they can inform the recipient the money has been sent. In 

addition, remittance providers believe that senders are familiar with and 

comfortable with MTOs and the products they offer and may choose an 

MTO as a provider because they trust the service the MTO offers. A 2004 

study of Latin American immigrants to the United States found that 78 

percent of those surveyed used MTOs to send money home to their 

families.13 A similar study of remittance recipients in the Dominican 

Republic found that 66 percent of them had a bank account, but 84 percent 

of recipients surveyed received remittances through an MTO either at the 

agent location or through home delivery.14

Remittance providers and senders we spoke with said there also are some 

possible disadvantages to sending money through an MTO. Some 

remittance senders may find that there are high costs associated with using 

MTOs. A remittance sender also could encounter language barriers when 

sending money, especially at some of the agent locations. For example, a 

sender may go into a chain supermarket that also serves as an agent of an 

MTO. This supermarket’s checkers may not speak the language of the 

sender since handling remittance transactions is only a small part of their 

job. A limited group of remitters that we spoke with echoed the concern of 

the higher cost of using some MTOs. 

Remittance providers we spoke with said that banks that offer remittance 

services have the advantage of offering remittance senders the option of 

some lower-cost products that are secure and reliable. Bank remittance 

products, such as dual ATM cards and account-based transfers, tend to be 

13Bendixen and Associates, “State by State Survey of Remittance Senders: U.S. to Latin 

America,” (April 2004).

14Multilateral Investment Fund and the Inter-American Development Bank, “Sending Money 

Home: Remittance Recipients in the Dominican Republic and Remittance Senders from 

the U.S.,” (November 2004).
Page 19 GAO-06-204 International Remittances

lower in cost than cash-based products offered by MTOs. As discussed in 

greater detail in the next section, the bank products we looked at had 

transfer fees ranging from no charge to $10.00 for a $300 transaction to 

Mexico, while the range of transfer fees for sending this amount through an 

MTO, according to those we spoke with, was $4.90 to $15.00. 

One barrier to using a bank for some remittance senders is that the senders 

may be required to have a bank account. Of the 12 banks we spoke with 

that are offering remittance products, 9 require a remittance sender to be 

an account holder for at least one of their products, and some of the others 

offer lower fees to account holders. Providers said that many immigrants 

may have come to the United States from countries with unstable banking 

systems and may distrust banks; others may think they do not have the 

proper documentation to open an account. Four banks we spoke with told 

us that lack of proper identification may keep someone away from using 

their remittances services. The banks offering remittance services that we 

spoke with all accept the Mexican consular identification card as a valid 

form of identification. 

Additionally, limited banking hours, language barriers, or inconvenient 

locations may make it difficult for an immigrant to use this service. Five 

banks we spoke with said their inconvenient location may be a barrier, 

while three said limited hours of operation may be a barrier. Most banks we 

spoke with are not open in the evenings or on the weekend, when 

immigrants often have time off from their jobs to take care of personal 

business. Some of these banks have or are considering opening branches in 

communities where immigrants live and work and are offering expanded 

hours in an effort to make their services more accessible to this market. In 

an effort to serve more customers, one community bank we spoke with has 

addressed this issue by opening a kiosk in a Latino grocery store that offers 

extended hours 7 days a week. Most of the tellers of this bank are bilingual 

in an effort to better serve the community they work with. This bank told 

us the grocery store is also an agent of a large MTO, and it has been able to 

draw many of these customers to its remittance product as it is offered at a 

lower cost than others and the bank has been able to bring them into the 

formal banking sector at the same time. Another bank said it had 

remodeled a branch in a predominantly Latino community, and the decor 

will have Mexican art and a color scheme that will remind customers of 

their homeland. 

Trust in the provider, low cost of service, reliability and security in the 

transaction, and language accessibility were all advantages cited by credit 
Page 20 GAO-06-204 International Remittances

unions we spoke with as reasons customers use them to send remittances. 

Six of the seven credit unions we spoke with cited low cost as a reason 

customers use them to send remittances. The IRnet remittance service 

used by most credit unions offering remittances is offered as a lower-cost 

alternative to MTOs. Five of the seven credit unions we spoke with told us 

that those who use their remittance services are attracted to the service 

because of the security of the transaction. They also mentioned that many 

of their tellers speak Spanish, the language of the majority of those sending 

remittances. Perhaps the most significant disadvantage to using a credit 

union for remittances is that of access. That is, credit union services may 

be limited to those who are members. If someone is not a member or does 

not have an account at the credit union, that person cannot use any of the 

services offered. All seven credit unions we spoke with cited this as a 

disadvantage. Some of the credit unions we spoke with said they would 

consider offering remittance services to nonmembers in the hopes of 

drawing those people in as members if they could get the proper approval 

from their regulators. Other reasons an immigrant may not use a credit 

union are similar to those for a bank, including inconvenient locations 

(four of the seven credit unions we spoke with cited this reason), 

perception that the remitter lacks the proper identification to open an 

account, and the slow transaction time. 

USPS officials said that the advantages to remittance senders of using their 

services are the reliability and security of the transaction, low cost, and 

trust in the provider. These officials believe sending remittances using 

USPS offers a level of security to some senders that other providers may 

not afford, since transfers are being conducted by an independent 

establishment of the U.S. government and USPS is a name many people 

trust and are familiar with. Additionally, USPS offers both of its products at 

a competitive cost (see the section on costs for a comparison of the cost of 

these products to others). USPS also has the advantage of offering other 

products and services that many people use (such as mailing and stamps), 

so it may be a convenient option. Disadvantages to the remittance senders 

in using USPS include possible language barriers, inconvenient location for 

pickup, and inconvenient hours of operation of either the USPS locations 

or payout agents. USPS employees may not speak the language of the 

remittance sender, and the lack of a common language could be a barrier to 

a transaction. Furthermore, most USPS locations are open during standard 

business hours during the week (8 a.m. to 5 p.m.) and weekend hours are 

limited. 
Page 21 GAO-06-204 International Remittances

Some Federal Banking 

Agencies Are Involved in 

Initiatives That Use 

Remittance Products and 

Services as a Means of 

Bringing Immigrants into 

the Mainstream Banking 

Sector

In an effort to bring immigrants into the formal banking system, some 

federal government agencies (in conjunction with certain foreign 

governments, banks, credit unions, and community groups) have launched 

two new efforts: the New Alliance Task Force (NATF) and the Federal 

Reserve Automated Clearing House (ACH) International wire transfer 

service (Directo a Mexico). These efforts intend to provide banking 

services primarily for Latin American immigrants in the United States. 

The NATF—an initiative focused on providing accounts with low-cost 

remittance services and financial education to immigrants—is a 

partnership formed in Chicago in 2003 by the Federal Deposit Insurance 

Corporation (FDIC), the Mexican consulate, banks, and others. According 

to FDIC, as of September 2005, the NATF was composed of 65 members, 

including 40 banks, government agencies, and nonprofit advocacy and 

community groups in the Chicago and Milwaukee areas. 

FDIC reported that as of September 2005, more than 10,000 people had 

participated in NATF financial education workshops and more than 50,000 

new bank accounts had been opened by those living in the areas where the 

NATF is active. The Mexican consulate participates in this effort by 

providing immigrants who come to the consulate or mobile consular sites 

with financial education on opening and using a bank account and 

educating banks about the Mexican consular identification card (also 

known at the matricula consular) as a valid form of identification for 

opening an account. Most banks or credit unions we spoke with said that 

they require two forms of identification, one of which usually is a photo 

identification. If an immigrant does not have a driver’s license or other 

identification, he or she may avoid the banking sector. The banks involved 

with the NATF all accept the matricula consular card and other valid forms 

of identification. Many have started offering remittance products to 

customers as a means of attracting them to the bank. 

NATF-based initiatives have recently been launched in Austin, Texas, and 

Los Angeles, California. Additional NATF programs are planned for other 

cities across the country in the coming months. FDIC officials told us that 

banks have been eager to get involved in these initiatives because of a 

strong interest among banks and community leaders to bring immigrants 

into the financial mainstream.

The Directo a Mexico service began in February 2004 and allows a 

customer of a U.S. bank to send money to a recipient with a Mexican bank 

account at a low cost through the Federal Reserve’s ACH network. This 
Page 22 GAO-06-204 International Remittances

network connects most banks in the United States to the Federal Reserve 

and allows them to receive and post electronic payments. The Directo a 

Mexico service operates at a cost of 67 cents per transaction to the bank 

and, according to officials at the Federal Reserve we spoke with, most 

banks that offer the service are charging their customers between $2.50 

and $3 per transaction. The recipient bank in Mexico gets a share of the 67 

cents, and the bank is not permitted to impose a pickup fee or other fees on 

the recipient side. Federal Reserve officials also told us that the Directo a 

Mexico service offers a favorable exchange rate to bank customers. When 

the program was launched, funds were available 48 hours after they were 

sent, but the Federal Reserve recently cut the delivery time in half in 

response to feedback from customers that they would like the money 

available sooner. As of October 2005, 50 banks in 20 states had enrolled in 

Directo a Mexico. Federal Reserve officials told us banks have been slow to 

sign up for this service and, of those that have, a small number are actively 

using it. Officials said they are making some changes to the program based 

on feedback they have received and hope that as more banks learn about 

the service, use will grow. 

Standard Costs for 

Sending Remittances 

to Certain Regions of 

the World Have Fallen, 

but These Costs Vary 

among Providers and 

Products 

Research conducted by the Inter-American Dialogue has shown that an 

increase in competition in the remittance market has resulted in a decrease 

in the cost of sending remittances from the United States to certain regions 

of the world. The standard costs to remittance senders are the transfer fee 

and the foreign exchange commission, which is the fee to convert currency. 

These costs vary for different products and providers. In our review of 28 

remittance providers we found that transfer fees can vary for numerous 

reasons, including provider, product type, and the receiving countries we 

focused on. However, we found that for the cash-to-cash product, transfer 

fees to send $300 to Mexico were similar across the providers with whom 

we spoke. Also, we found that some banks offered card-based and accountto-account-based products that cost less than the cash-to-cash method. The 

foreign exchange commission also can vary for multiple reasons, such as 

the provider and product type or the level of competition among sending 

agents. In the case of Latin America and the Caribbean, the foreign 

exchange commission has come down since 2001, according to the InterAmerican Dialogue. Finally, additional costs outside of the transfer fee and 

the foreign exchange commission may exist for certain products.
Page 23 GAO-06-204 International Remittances

Competition Has Produced 

Reductions in Remittance 

Costs from the United 

States to Latin American 

Countries

Since the early 2000s, there has been increased competition among 

remittance providers from the United States to Latin America. The 

marketplace for remittances to this region has evolved as new players have 

entered the market. As a result, the total cost to the remittance sender to 

remit funds from the United States to Latin America has fallen in recent 

years. For example, according to the Inter-American Dialogue, the total 

cost of remittances from the United States to Latin America and the 

Caribbean, particularly Mexico, has fallen since 2001 and the average cost 

of sending $250 has fallen from 12.5 percent in 2003 to 7 percent in 2005. 

However, the price reductions have leveled off recently. Based on the InterAmerican Dialogue’s analysis of 14 Latin American and Caribbean 

countries as shown in figure 7, total costs, which include transfer fees and 

the foreign exchange commission, have fallen for remittances sent across 

all types of providers since 2001. Among providers surveyed by the InterAmerican Dialogue, large national MTOs continue to charge the highest 

total costs for the remittance senders. According to an official from the 

Inter-American Dialogue, these higher costs are driven primarily by higher 

transfer fees rather than higher foreign exchange commissions. Compared 

with these large national MTOs, banks and credit unions consistently had 

lower total costs.
Page 24 GAO-06-204 International Remittances

Figure 7: The Total Cost of a Remittance Transfer as a Percentage of the Amount 

Sent by Industry Sector for 14 Latin American and Caribbean Countries, 2001-2004

Note: The total cost includes the transfer fee and the foreign exchange commission. The transactions 

that were analyzed were cash-to-cash transactions. The numbers of providers that data were collected 

from varied by year depending on factors such as which providers were in business. Specifically, data 

were obtained from 45 companies in 2001, 76 in 2002, 75 in 2003, and 60 in 2004. These companies 

were chosen based on, among other things, the criteria that they served at least one country in Latin 

America and the Caribbean, were present in at least one state in the United States, and included the 

largest providers to specific countries in the region. The National Money Transmitters Association 

(NMTA) has about 12 members, who are typically medium-sized and small providers. The U.S. banks 

and all credit unions include those institutions that are offering a remittance transfer product either as 

agents of an MTO or as companies with their own platforms. The selection was based using the list of 

banks accepting the Mexican consular identification card as well as the list of credit unions that are 

agents of Vigo or MoneyGram. “Other” includes about 30 providers that are typically smaller regional 

players and are not members of NMTA.

2001 2002 2003 2004

Percentage

Other

U.S. banks and all credit unions

Vigo

MoneyGram

Western Union

National Money Transmitters Association

Source: Inter-American Dialogue.

0

2

4

6

8

10

12

14
Page 25 GAO-06-204 International Remittances

Remittance Transfer Fees 

Vary Depending on a 

Number of Factors

Almost all providers we spoke with charged remittance senders a fee to 

transfer funds, which varied depending on such factors as the provider, 

product type, and where the sender initiated the transaction or where the 

money was received. We found that for the most common cash-to-cash 

remittance product, the average transfer fees to send $300 to Mexico were 

similar in cost regardless of provider. As shown in table 3, among the 

limited number of providers we spoke with that offered a cash-to-cash 

product and provided us with detailed cost information, MTOs charged 

approximately $11, credit unions charged approximately $10, USPS 

charged $10, and banks charged approximately $9 to send $300 to Mexico. 

There was a greater range for sending $300 to the Philippines using a cashto-cash product.

Table 3: Average Transfer Fees to Send $300 to Mexico and the Philippines for Cashto-Cash-Based Product Offered by the Providers

Source: GAO.

Note: Some providers offered multiple cash-to-cash products or charged different fees typically 

depending on how the funds were distributed, and in those cases these were included as separate 

data points in our calculation of the average. Additionally, in this cost summary, we excluded 

information from providers with whom we spoke who did not supply us with detailed cost information 

on their remittance products or who were not actively providing remittance products when we met with 

them.

a

All customers using remittance services were required to be members of the credit unions we spoke 

with. Members can debit their account to send a remittance, conducting an account-to-cash transfer. 

However, all credit unions we spoke with had formed partnerships with an MTO to offer a product that 

was similar to the typical cash-to-cash transfer product. Therefore, we have categorized credit union 

remittance products as “account-to-cash or cash-to-cash (MTO)” and have included credit union 

products in table 3.

Officials of some MTOs we spoke with told us that that the transfer fee they 

or their agents charged for sending $300 from the United States to Mexico 

or the Philippines using a cash-to-cash product could vary depending on 

the originating and receiving locations. Officials indicated that competition 

from other MTOs in a certain area was a reason why their transfer fees 

from various locations in the United States to the same country could 

Country

MTOs’ average

transfer fees in

U.S. dollars

(number of

respondents)

Banks’

average

transfer fees in

U.S. dollars

(number of

respondents)

Credit unions’a 

average

transfer fees in

U.S. dollars

(number of

respondents)

USPS’s

average

transfer fees in

U.S. dollars

(number of

respondents)

Mexico $10.70(4) $8.80(5) $10.29(6) $10.00(1)

The Philippines 12.43(4) 25.00(1) 12.33(5) Not offered
Page 26 GAO-06-204 International Remittances

differ. Officials from some MTOs also told us that agreements they had with 

their various paying agents in the receiving countries could also affect the 

transfer fee and fees could differ based on the specific location to which 

the remittance was sent.

Besides the cash-to-cash product, remittance providers we spoke with also 

offered other remittance products, some of which had a lower transfer fee 

to send $300 to Mexico or the Philippines. Table 4 shows the range of 

transfer fees across the remittance products offered by the 23 providers we 

surveyed that provided us with detailed cost information. Banks offered a 

low-cost alternative to send money to Mexico through account-to-account 

transfers. Four banks we spoke with, three large national banks and one 

community bank, provided this service with transaction fees costing up to 

$8, generally to send between $1,000 and $3,000 to Mexico. To use this 

product, typically both the sender and the receiver were required to have 

accounts at a participating bank. However, the community bank that 

offered this service through the Federal Reserve’s Directo a Mexico service 

enabled nonaccount holders to send cash for a higher price of $4.00 instead 

of $2.50 for account holders. Additionally, two other banks enabled the 

recipient to pick up cash when money was sent to Mexico, and in one case, 

the bank charged the sender $8 to enable a cash pickup instead of $5 to 

send funds to a bank account. Of the banks we spoke with, only one large 

national bank provided an account-to-account transfer service to the 

Philippines and charged $8 to transfer up to $1,000 per day. As discussed 

earlier, however, banks have around a 5 percent share of the remittance 

market; thus these products while less costly, are used to a much lesser 

extent than the cash-to-cash product. 
Page 27 GAO-06-204 International Remittances

Table 4: Range of Transfer Fees to Send $300 to Mexico and the Philippines for All 

Remittance Products Offered by the Providers

Source: GAO.

Note: Some banks and credit unions offered the traditional wire product as a way to conduct 

international transfers. Fees for this product were generally about $30 or $40. However, we excluded 

these products from our summary of costs because they are typically not viewed as a remittance 

products. 

a

One bank offers remittances through its dual ATM card for free if the customer has a specific bundled 

set of services with the bank.

Banks are also providing new lower-cost card-based products, such as dual 

ATM and stored value cards.15 For example, to withdraw money using a 

dual ATM card, U.S. banks typically charge account holders a fee of $5 or 

less for each withdrawal, and the withdrawal fee could sometimes be as 

low as $1.50. One bank offering an ATM product charged the account 

holder a fee when funds were deposited into the ATM account or 

transferred from a separate account for the recipient, and there was no fee 

charged when the recipient withdrew funds at designated ATMs in the 

receiving country. Banks we spoke with that offered a stored value card 

charged the remitter a fee ranging from $2 to $10 to load the card. All five 

banks we spoke with that offered a dual ATM card product required the 

remittance sender to have an account with them. However, of the three 

banks we spoke with that offered a stored value card product, only one 

required customers to hold an account to use this product. However, one 

bank charged a higher fee to nonaccount holders. For a more detailed 

presentation of the transfer fees and additional costs of the different 

remittance products among the 28 providers we interviewed, see appendix 

III.

Country

MTOs’ range of

transfer fees in

U.S. dollars 

(number of

respondents)

Banks’ range

of transfer fees

in U.S. dollars

(number of

respondents)

Credit unions’

range of

transfer fees in

U.S. dollars

(number of

respondents)

USPS’s range

of transfer fees

in U.S. dollars 

(number of

respondents)

Mexico $4.90-$15.00(6) $0.00-$10.00(10) $8.00-$16.00(6) $3.25-$10.00(1)

The 

Philippines

8.00-$16.88(6) 2.00-$25.00a

(4) 8.00-$16.00(5) Not offered

15At the time of our study, two MTOs we spoke with also provided a stored value card 

product, although one MTO provided this product only through a specific bank in Mexico. 

Other MTOs were considering offering this product. 
Page 28 GAO-06-204 International Remittances

Foreign Exchange 

Commissions Also Vary, but, 

Fees Have Fallen for Some 

Countries

Most remittance providers also charge a fee to convert currency, that is, to 

change U.S. dollars into local currency. Customers generally receive a 

“retail” price for the conversion of U.S. dollars to the local currency. This 

quoted price is normally higher than what providers pay to originally 

purchase the currency. This difference is known in the industry as an 

exchange rate spread, and the higher the spread, the less advantageous it is 

to the remittance sender. We attempted to gain an indication of the average 

percentage difference between the exchange rate offered by five MTOs to 

remittance senders and the exchange rate set by the central bank of the 

recipient country. We obtained exchange rate information for these MTOs 

over the Internet for transfers distributed in cash funded through a credit 

card or a bank account for a 35-day period from mid-June to the end of July 

2005. (See app. I for more detail on our methodology.) We found that, on 

average, the exchange rate spread for Mexico among these five MTOs 

ranged from negative 2.15 percent to 3.65 percent, as shown in figure 8. The 

MTO that offered a negative 2.15 percent exchange rate spread, offered on 

average a better exchange rate than the central bank rate. Figure 8 also 

provides the average exchange rate spread for the Philippines among the 

five MTOs. For the Philippines, in general the MTOs had a higher exchange 

rate spread than for Mexico, with the exception of MTO 1. In addition, for 

one bank, we obtained exchange rate information over the phone for its 

account-to-account transfer product to Mexico and dual ATM card for the 

Philippines. Its exchange rate spread was 2.59 percent for Mexico and -0.04 

percent for the Philippines. 
Page 29 GAO-06-204 International Remittances

Figure 8: The Average Percentage Difference in Exchange Rate from the Central 

Bank Rate Offered by Five MTOs, June-July 2005

Note: The average percentage difference was calculated by taking the daily difference between the 

providers’ exchange rate and the central bank rate divided by the central bank rate and computing the 

average of all available days. A negative value means that on average, the provider offered a higher 

exchange rate to the remittance sender than the rate established by the central bank. These figures 

were taken for remittances between California and Mexico and California and the Philippines.

In addition, when comparing the daily exchange rate offered by all six 

providers with the rate offered by the Central Bank of Mexico, they all 

follow a pattern of a decreasing rate over time, as shown in figure 9. One 

provider offered a fixed rate over this period, which was higher than that 

offered by the Central Bank of Mexico.

Mexico Philippines

0.77

2.12

1.70

3.65

-2.15

1.55

2.27

2.64 2.79

Percentage

MTO2

MTO3

MTO4

MTO1

MTO5

Source: GAO.

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2.44
Page 30 GAO-06-204 International Remittances

Figure 9: The Exchange Rate Offered by the Six Providers and the Central Bank of Mexico, June-July 2005

Note: Gaps in the line indicate that data were missing for that particular day.

For the Philippines, the exchange rate offered by the six providers and the 

Central Bank of the Philippines followed somewhat of an increasing trend, 

as shown in figure 10. For the most part, all of the providers offered an 

exchange rate lower than that of the Central Bank over the time period we 

looked at.

14 15 16 17 20 21 22 23 24 27 28 29 30 1 4 5 6 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27 28 29

June

Month and day

July

Percentage

Source: GAO.

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

11.0

Central Bank of Mexico

MTO5

MTO3

MTO4

MTO2

MTO1

Bank
Page 31 GAO-06-204 International Remittances

Figure 10: The Exchange Rate Offered by the Six Providers and the Central Bank of the Philippines, June-July 2005

Note: Gaps in the line indicate that data was missing for that particular day.

Research conducted by the Inter-American Dialogue between 2001 and 

2004 on the cost of currency shows that the exchange rate spread for 

remittances to Latin America and the Caribbean has decreased since 2001, 

as shown in figure 11. In particular, the research shows that the exchange 

rate spread had significantly fallen by 2004. For Mexico, this is consistent 

with what we were told by an official from a company that works with 

entities in the United States, such as large banks, credit unions, and 

national MTOs, to facilitate transfers to Mexico. He told us that he did not 

see a great deal of variation in the exchange rate spread among 

approximately 200 client companies. He stated that most companies 

charged a 1 percent to 1.2 percent spread.

14 15 16 17 20 21 22 23 24 27 28 29 30 1 4 5 6 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27 28 29

June July

Source: GAO.

Percentage

Month and day

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

Central Bank of the Philippines

MTO5

MTO3 MTO4

MTO2

MTO1

Bank
Page 32 GAO-06-204 International Remittances

Figure 11: The Exchange Rate Spread among Various Remittance Providers to 14 

Latin American and Caribbean Countries, 2001-2004

Remittance providers we spoke with said that the spread on the most 

popular cash-to-cash product can vary for different reasons. For example, 

some providers said that contracts with paying agents in each country 

could affect the spread, as well as the amount of currency a provider 

purchases. Officials from some MTOs that we spoke with said competition 

between sending agents could influence conversion rates. Most banks and 

credit unions that had partnerships with MTOs to provide the cash-to-cashbased service told us that the partner MTO set the exchange rate.

For other remittance products, the exchange rate offered to customers was 

determined in varying ways. Large national banks we spoke with that 

offered account-to-account transfers generally told us that they, with their 

2001 2002 2003 2004

Percentage

Other

U.S. banks and all credit unions

Vigo

MoneyGram

Western Union

National Money Transmitters Association

Source: Inter-American Dialogue.

0

.5

1.0

1.5

2.0

2.5

3.0

3.5
Page 33 GAO-06-204 International Remittances

partner banks in receiving countries, determined the exchange rate. The 

exchange rate offered to customers who use the Directo a Mexico service 

is a 0.21 percent markup from the wholesale rate determined by the Central 

Bank of Mexico. For the card-based products, such as the dual ATM or the 

stored value card, providers we spoke with indicated that other institutions 

such as banks in the receiving country or credit card associations generally 

determined the exchange rate each time the card was used. 

Additional Costs May Exist, 

Depending on Provider, 

Product, and Service 

Offered 

While the transaction fee and the foreign exchange commission apply in 

almost all remittance products we examined, consumers may incur 

additional fees, depending on the provider, product, and service offered. 

For example, one MTO we spoke with told us consumers may incur 

additional fees to send funds to rural areas, use home delivery, pay with a 

credit card, or receive a confirmation that the money was sent. The MTO 

said that it disclosed such fees to the customer at the time of the 

transaction. MTOs and banks that offer stored value cards may also charge 

additional fees to initially purchase or set up the card, deliver the card to 

the recipient, or maintain the card on a monthly basis. 

Additionally, because some products offered by banks and credit unions 

require customers to hold accounts, indirect fees related to establishing or 

maintaining an account may apply. Such products were typically lower-cost 

products, as noted earlier, such as dual ATM cards or account-to-account 

transfers. Seven of the 10 banks we spoke with offered at least one product 

that required the customer to have an account. These banks typically 

charged a fee to open or maintain an account that was waived if the 

customer met direct deposit or minimum balance requirements. For 

example, many banks charged a fee of $3 to $5 per month if such 

requirements were not met. All credit unions we spoke with required 

customers to become a member to use their remittance products and 

maintain a minimum balance in their account, typically $50 or less. Most 

credit unions charged a monthly service fee if members did not meet 

minimum balance requirements, ranging from $1 to $6.
Page 34 GAO-06-204 International Remittances

Although State and 

Federal Disclosure 

Requirements Vary, 

Remittance Providers 

Offer Basic 

Information on Cost 

and Error Resolution

Remittance providers we met with generally provided customers with basic 

disclosure information on the transaction fee and the exchange rate, as 

well other terms and conditions of the transaction. The way in which 

disclosure information was presented, as well as what information state 

and federal regulators required providers to disclose, varied. Judging from 

the receipts we examined for the cash-to-cash product, providers 

consistently presented disclosures on costs and error resolution in a single 

receipt. Disclosures for other remittance products offered by banks were 

presented to customers in multiple forms or at different times, such as in a 

fee schedule when customers first opened an account or on a monthly 

statement. Because of various fees and types of disclosures, it may be 

difficult for customers to comparison shop across different types of 

remittance products. There is no consensus among the officials we spoke 

with on whether customers need additional disclosure information to make 

informed decisions. However, efforts are under way to provide some 

consumers with more aggregated information on the cost of remittances 

across different providers and products. 

Remittance Providers 

Consistently Presented 

Disclosures on Costs and 

Error Resolution for Cashto-Cash Products, but 

Disclosures Varied for Other 

Remittance Products

Remittance providers disclosed cost and error resolution information to 

their customers in varying ways. Most of the MTOs, banks, and credit 

unions we spoke with offering the predominant cash-to-cash product 

provided customers with a receipt at the time of the transaction detailing 

cost information and terms and conditions of the transfer.16 Receipts we 

examined from providers of the cash-to-cash product, including MTOs, 

banks, and credit unions, contained information on the transfer fee, the 

exchange rate applied for the transaction, and the amount paid to the 

recipient. Figure 12 provides an example of cost information found on a 

typical receipt. Additionally, providers we spoke with offering cash-to-cash 

products that provided us with receipts displayed information on their 

receipts in English and Spanish regarding the terms and conditions for a 

customer’s right to a refund as well as a customer service telephone 

number. One MTO that focuses on the Philippine market presented this 

information in Tagalog. Some providers of cash-to-cash-based products 

disclosed on the receipts we examined that they made a profit from the 

currency conversion. Receipts we examined for the USPS Dinero Seguro 

product included the exchange rate applied to the transaction and the 

interbank rate on the day of the transaction. Officials from USPS told us 

16Internet-based MTOs disclose costs on receipts separately from terms and conditions. 
Page 35 GAO-06-204 International Remittances

that by providing the interbank rate and retail exchange rate, customers 

could calculate how much the foreign exchange commission was and use it 

to calculate the total cost of the remittance transaction. Some providers 

also indicated that they or their agents informed customers about costs in 

other ways, such as offering a toll-free telephone number customers can 

call to learn what the exchange rate was for that day, requiring that 

customers review and sign the receipt before the transaction is completed, 

or posting the fees and exchange rate on signage in their stores. 

Figure 12: An Example of a Cash-to-Cash Receipt

MONEY TRANSFER OPERATOR

555 Street 5

City, State Zip

(555) 555-5555

RECEIPT

Receipt

(Copy# 2)

Sender Receiver Cu Customer # stomer #

Date Time Cashier Authorized agent

Argentina

Bolivia

Brazil

Canada

Costa Rica

China

Ethiopia

England

Guatemala

Honduras

Mexico

New Zealand

Nigeria

Philippines

Poland

Puerto Rico

Spain

Ukraine

U.S. Virgin Islands

Venezuela

U.S. locations

Boston

Chicago

Los Angeles

New York

Philadelphia

Washington DC

Transaction Record

Folio #11188778899

PIN #: 444 444 4444 PHONE: (800) 555-5555

MTO's Bank, 444 Street 4, City, State Zip (555) 444-4444

Signature

* PAY IN NATIONAL *

AMOUNT:

RATE:

NAT:

FEES:

TOTAL:

100.00

10.81

1,081.00

10.00

110.00

0111111223A 09/22/2005 15:08:37 SMITH JW

Sender A

55 Ave X

Washington, DC 20548

Receiver A

Receiving Bank

Av. Verde 55

Mexico City, Mexico 55555

555678910X 01134G5555

Your signature confirms that:

• The above information is correct and my responsibility.

• Complaints may take 5 to 7 business days to process.

• I agree to all terms listed on the back for this transaction.

Source: GAO.

Transfer fee

Amount of

dollars sent Exchange rate applied to transaction

Amount in local currency

to be paid to recipient
Page 36 GAO-06-204 International Remittances

In contrast, disclosures on costs and error resolution for other remittance 

products and providers we examined varied. For example, banks we spoke 

with offering dual ATM cards told us they usually presented fee information 

and transaction terms and conditions to customers when they first opened 

their account or in monthly statements, generally in English, as they would 

for any bank customer. The exchange rate for card-based products, 

including the dual ATM or stored value card to send a remittance, is 

determined by other parties, such as the bank in the foreign country or the 

credit card association, each time the card is used. Therefore, bank 

officials told us the remittance sender does not know the exchange rate 

that the recipient will receive when withdrawing funds from an ATM or 

using the card at merchants.17 

For account-to-account transfers, banks told us they disclosed fees in 

various ways. Officials from one large bank told us customers obtained 

information on the transfer costs in the fee schedule provided when they 

opened an account, and in brochures provided to the customer. The 

customer could obtain the exchange rate by calling a toll-free number. Both 

the transfer fee and exchange rate applied to the transaction would also be 

itemized on the sender’s monthly statement. According to officials from 

another large bank, customers could conduct account-to-account transfers 

at an ATM or online, and the machine displayed such information as the fee 

and the exchange rate, the amount to be transferred in U.S. dollars, and the 

amount to be transferred in local currency. According to officials from this 

bank, this information was displayed on the screen and printed on the 

receipt. They told us that customers could review this information on the 

screen before completing the transaction. A community bank that was 

offering account-to-account transfers to Mexico through the Directo a 

Mexico service disclosed the transfer fee for account holders in a brochure. 

The exchange rate for this product cannot be specified at the time of 

transfer because the Central Bank of Mexico determines the exchange rate 

the following day.

For account-based bank products, such as dual ATM cards and account-toaccount transfers, officials from banks we spoke with told us that, like the 

cost and fee information, terms and conditions of the transaction were also 

17One provider we spoke with that offered a stored value card through a partner bank in 

Mexico told us that funds are immediately converted into pesos when funds are transferred 

and the card is loaded with pesos. Thus, the sender knows the exchange rate and the 

amount to be received by the recipient when the remittance is sent.
Page 37 GAO-06-204 International Remittances

generally presented in booklets or pamphlets given to customers when they 

opened an account with the bank. This information was generally 

presented in English. These, along with disclosures on fees, were standard 

disclosures that banks were required to provide to all of their customers 

who opened an account subject to electronic fund transfers with the bank. 

Judging from documents we examined, banks typically provided customers 

with fee information in separate booklets or pamphlets from those that 

included disclosures on such things as the terms and conditions of the 

transfer or ATM card, steps to take regarding unauthorized transfers, and 

telephone numbers to contact in the event of an error.

State Disclosure Laws Vary 

and Federal Disclosure 

Laws Do Not Apply to All 

Remittance Products 

Regulations on remittance product disclosures varied based on the 

provider and product. Disclosures could also vary by state if the provider 

was regulated at the state level. In 46 states, MTOs are required to have a 

state license, and some of these states have specific disclosure 

requirements. We reviewed the disclosure laws and regulations of 15 states. 

We chose states in three categories: those with over 1 million immigrants; 

those with immigrant populations of less than 1 million, but more than 

380,000; and, those with less than 15,000 immigrants based on the U.S. 

census of 2000.18 Among these states, 6 require licensed MTOs to provide a 

receipt to the customer for each transaction. However, each has varying 

requirements about exactly what information must be included on the 

receipt, as shown in table 5. For example, California’s regulations specify 

that receipts must include certain information, such as the exchange rate, 

the amount of commission or fees, and the total amount to be delivered to 

the recipient. California also explicitly stipulated the exact language 

providers must use regarding a customer’s right to a refund that must be 

present on every receipt. In contrast, Massachusetts requires providers to 

give customers a receipt, but it does not specify what types of information 

should be presented on the receipt. Additionally, of the states we reviewed, 

California and Texas specifically require providers to give information on 

the exchange rate and present information in languages other than English, 

as applicable. 

18States in the first category were California, Florida, Illinois, New Jersey, New York, and Texas. 

States in the second category were North Carolina, Georgia, Arizona, Massachusetts, Virginia, and 

Colorado. States in the third category were North Dakota, Montana, and Wyoming.
Page 38 GAO-06-204 International Remittances

Table 5: States Reviewed That Required a Receipt

Source: GAO.

a

In addition, the receipt for Georgia must also include, among other things, the date the order was 

placed.

b

In addition, the receipt for Illinois must also include, among other things, the date of the transaction 

and to whom the money is to be transmitted.

c

Massachusetts law does not include specific receipt requirements, but it says that the receipt used 

must be a form approved by the state’s Commissioner of Banks. 

d

In addition, the receipt for Texas must also include, among other things, the toll-free or local phone 

number customers can access at no charge to receive information about a currency transmission. If 

the customer requests, the business must provide the required disclosures before completing the 

transaction.

State

Receipt contents

Costs Error resolution Receipt language(s)

California • Rate of exchange 

• Amount of commission or fees

• The amount in U.S. dollars to be 

transferred

• Total amount of currency presented

• Total amount to be delivered to the 

recipient

• Right to a refund and the 

request process

• English and the language 

principally used by 

licensee/agent to advertise, 

solicit, or negotiate if other 

than English

Georgiaa • Dollar amount of transmission 

• Fee charged

• No requirement • No requirement

Illinoisb • Amount of the transmission

• Service charge

• The licensee’s refund 

procedures

• Toll-free telephone number 

for customer assistance

• No requirement

Massachusetts • No requirementc • No requirement • No requirement

New York • Dollar amount of the transmission

• Fee charged

• Statement of licensee’s 

liability if the transmission 

is delayed or not delivered

• Statement of licensee’s 

refund policy

• No requirement

Texasd • Amount of currency to transfer

• Fees charged 

• If the exchange rate is fixed at the time of 

the transaction, the receipt must disclose 

the rate of exchange; amount to be paid in 

the foreign currency; and the period, if any, 

in which the payment must be made in 

order to qualify for the fixed rate

• If the exchange rate is not fixed when the 

transaction is initiated, the receipt must 

also disclose that the rate of exchange will 

be set at the time the recipient receives the 

funds in the foreign country 

• As described in table 6, a 

notice on how a customer 

should resolve complaints 

must be posted or included 

on receipts

• No requirement
Page 39 GAO-06-204 International Remittances

In addition to receipt requirements, disclosure requirements for error 

resolution procedures also varied among the 15 states we reviewed. As 

shown in table 6, 6 states required such disclosure while the others did not. 

States with both receipt and error resolution disclosure requirements 

typically specified that receipts must disclose information such as a 

customer’s right to a refund, the licensee’s refund policy, or a phone 

number the customer could call regarding complaints. Florida and 

Colorado had disclosure requirements, but no receipt requirements, and 

specified in their laws that licensees must provide contact information for 

the state department for consumer contacts or complaints. Additionally, 

among the states we reviewed, some states that did not have explicit 

disclosure requirements for MTOs in their laws, such as Georgia and 

Arizona, did provide consumer contact and complaint forms on their Web 

sites. 

Table 6: States Reviewed That Specify Disclosure Requirements for Error Resolution

Source: GAO.

a

The law excludes licensees that only sell travelers checks and money orders. 

State

Requires 

receipt Disclosure contents

California Yes • As shown in table 5, the receipt must contain a notice concerning the right to a refund and the basic 

process for obtaining a refund.

Colorado No • Every licensee must post a state-furnished notice that provides consumer information concerning the 

Colorado Money Transmission Act and how to file a consumer complaint with the state’s banking 

department. 

Florida No • Provider must give customers a toll-free phone number for the purpose of customer contacts or the 

address and phone number of the appropriate state consumer services office.

Illinois Yes • As shown in table 5, the receipt must include the refund procedures and a toll-free telephone number 

for customer assistance.

• Each licensee/seller must post a notice with the name of the licensee and a toll-free phone number for 

the Department of Financial Institutions, which will provide customer support for suspected violations 

of Illinois’ Transmitters of Money Act.

New York Yes • As shown in table 5, the receipt must include a statement of the licensee’s liability if the transmission is 

delayed or not delivered, as well as the refund policy.

• Licensee’s signage must include a phone number for questions and complaints and a statement that 

unresolved consumer complaints may be mailed to the Consumer Services Division of the state 

banking department. Signage must be in English and in any other predominant language spoken by 

the licensee’s customers.a

Texas Yes • A notice must be used to let consumers know how to file complaints. The notice should say that 

complaints should be directed to the state’s banking department and give the address and phone 

number. The notice must be provided in the language in which the transaction is conducted and must 

conform substantially with the language in the law. The law provides specific measures to give the 

required notice, such as how it can be posted and the fact that it may be included on receipts.
Page 40 GAO-06-204 International Remittances

Although state disclosure requirements varied, MTO receipts we examined 

included information on costs and error resolution, such as a customer’s 

right to a refund.19 Some MTOs we spoke with that had branches or agents 

in multiple states told us they typically produced one standard receipt for 

their agents across the United States and adhered to California’s disclosure 

requirements because of their strictness.

In contrast to MTOs, banks and credit unions are regulated at either the 

federal level or state level and are subject to federal disclosure laws. The 

Electronic Funds Transfer Act of 1978 (EFTA) establishes the rights, 

liabilities, and responsibilities of participants in electronic fund transfer 

systems.20 Under EFTA, financial institutions must provide specific 

disclosures to customers, such as any fees imposed by the financial 

institution for electronic fund transfers, a summary of the consumer’s 

liability for unauthorized transfers, and procedures regarding how errors 

will be resolved. EFTA also requires that financial institutions generally 

provide monthly statements as well as receipts at electronic terminals. 

Receipts must contain information such as the amount of the transfer, 

which may include a transaction fee if the amount of the fee is disclosed on 

the receipt and displayed on or at the terminal.

The banks we spoke with indicated they believed EFTA did not apply to all 

of their remittance products. For example, an official from one bank told us 

that the act applied to dual ATM cards and international account-toaccount transfers, but not cash-to-cash products they offered. An official 

from another bank that offered customers a remittance product that 

enabled customers to conduct account-to-account or account-to-cash 

transfers told us that although remittance products were not subject to 

EFTA, the bank followed EFTA in providing disclosures for their product. 

Additionally, EFTA does not specifically extend to stored value cards.21

19Internet-based MTOs provided terms and conditions on their Web sites that were separate 

from the cost information provided on their receipts. 

20EFTA, codified at 15 U.S.C. §§ 1693 et. seq., as implemented by Federal Reserve regulations 

at 12 C.F.R. Part 205 (“Regulation E”), applies to any electronic fund transfer that authorizes 

a financial institution to debit or credit a consumer’s account. 12 C.F.R. § 205.3(a). 

Electronic fund transfers covered by EFTA include point-of-sale transfers, ATM transfers, 

debit card transfers, and transfers initiated by telephone. See12 C.F.R. § 205.3(b). 

21The District of Columbia and at least 15 states have extended their money transmitter laws 

to prepaid or stored value cards; the states are Connecticut, Illinois, Iowa, Louisiana, 

Maryland, Minnesota, Mississippi, North Carolina, Oregon, Texas, Vermont, Virginia, 

Washington, West Virginia, and Wyoming. 
Page 41 GAO-06-204 International Remittances

Consequently, banks that offer stored value cards, make their own 

decisions on the type of disclosures to provide for this product. For 

example, disclosures from one community bank offering customers a 

reloadable stored value card included information on fees to issue and 

maintain the card, how the exchange rate was determined for international 

transactions, and the customer’s liability in using the card. Such 

disclosures, however, did not provide information on the fee to reload the 

card or the maximum amount that could be loaded on the card each time. 

Additionally, according to officials from a large MTO and a trade 

organization that represents credit unions, banks and credit unions that 

have formed partnerships with MTOs to offer a cash-to-cash product are 

generally viewed as agents of an MTO and follow MTO disclosure laws. An 

official from one large bank that we spoke with that offered its own cashto-cash based product provided disclosures on fees and terms and 

conditions of the transactions to their customers, but indicated the bank 

did this voluntarily.

Remittance Providers 

Disclose Certain Cost 

Information, but Consumers 

May Need to Do Additional 

Work to Compare Costs of 

Different Providers

Judging from disclosure documents we examined, providers of cash-tocash products typically included information in a single source on cost and 

error resolution, while providers of other remittance products presented 

more disparate sources and forms of information. As discussed earlier, 

disclosure documents for most of the cash-to-cash based products we 

examined had information on costs and error resolution presented to the 

customer in a single receipt. Providers generally provided this information 

in English and another language, typically Spanish. However, on the basis 

of disclosure documents we examined, we found that providers did not 

always do this for other remittance products. For example, for an accountto-account transfer product offered by one large national bank, information 

on the transfer fee could be found in a fee schedule presented to the 

customer at the time the account was opened as well as on monthly 

statements. This information was generally presented only in English. The 

exchange rate that would be applied on the day of the transfer could be 

obtained by calling a toll-free number. The same bank presented 

information on dual ATM cards in a similar manner, with information on 

transfer fees in one booklet and information on the exchange rate and 

account terms and conditions in another booklet. Additionally, some banks 

told us that some materials (such as brochures) were provided in multiple 

languages such as English, Spanish, and for one bank in Tagalog; and other 

disclosure materials (such as monthly statements) were provided in 

English, but not in other languages. 
Page 42 GAO-06-204 International Remittances

Because of various fees and types of disclosures, it may be difficult for 

customers to comparison shop across different types of remittance 

products. For the cash-to-cash product, providers typically disclose 

transfer fees on a single receipt, so the fees are comparable. However, 

because the cost of a remittance is based on two components, the transfer 

fee and the exchange rate spread, customers may need to do additional 

calculations to compare the total cost across providers. For example, one 

provider may charge a higher transfer fee, but a more favorable exchange 

rate, while another provider may charge a lower transfer fee, but a less 

favorable exchange rate. Additionally, comparing costs across other 

remittance products could be more complicated for the remittance sender 

if there are additional fees that are not related to the remittance itself, such 

as a fee to open or maintain an account for account-to-account products. 

For other products, such as some card-based products, providers may not 

disclose all cost information at the time of the transaction, such as the 

exchange rate, because this is determined at the time the card is used. 

There was no consensus among the officials we spoke with about whether 

customers use current cost and disclosure information available to them to 

comparison shop. Some remittance providers, community groups, and 

experts believed remittance senders shopped around and were very aware 

of the exchange rate and transfer fees, while others believed that senders 

were not aware or paid less attention to such costs and did not shop 

around. Additionally, in informal discussions with limited groups of 

immigrants who send money home, some immigrants told us they are 

aware of costs, including the exchange rate, and these are a factor in their 

choice of provider. However, other factors affect their choice of provider, 

such as location, the security of the transaction and trust in the provider. 

Some of these immigrants also indicated that it was not difficult to find out 

and compare exchange rates, but that they did not have time to do so.

Moreover, there was no consensus among officials we spoke with about 

whether additional disclosure information would be useful for customers 

to make better informed decisions. Some experts and officials we spoke 

with believed that information currently disclosed on receipts of large 

national MTOs was sufficient for the customer to make informed decisions. 

They also did not believe additional information, such as the exchange rate 

spread, needed to be disclosed on money transfer receipts. Other officials 

noted that with some products, such as the Directo a Mexico service, it may 

be difficult to require providers to disclose a fixed exchange rate at the 

time of transfer because the exchange rate for such products is not set at 

that time. In contrast, other experts and community groups believed more 
Page 43 GAO-06-204 International Remittances

information could be provided to the customer on the total cost of 

remittances or aggregated in a way that would enable customers to more 

easily compare costs across different providers and products. 

Although it is not clear whether additional disclosures would be useful to 

the customer, there are efforts are under way to provide some consumers 

with more aggregated information on the cost of remittances across 

different providers and products. For example, in 2003 the Mexican 

consulate in Chicago formed a partnership with Procuraduria Federal del 

Consumidor (PROFECO), the Mexican consumer protection agency, to 

publish on the Internet information on the transfer fees and exchange rates 

for remittances sent to Mexico from nine cities in the United States. An 

official from the Mexican consulate in Chicago told us that PROFECO 

relies on voluntary information from a cross section of providers (banks, 

MTOs, and USPS) and updates the Web site on a weekly basis. The United 

Kingdom has used a different approach. There, the Department for 

International Development and the Banking Code Standards Board 

commissioned a survey to examine the costs of 22 money transfer 

providers to six target countries. A 2005 report contained these survey 

results, which are part of a public awareness campaign to provide 

information to consumers through pamphlets and on the Internet.22 Such 

information includes the names of providers in the United Kingdom that 

send remittances to the targeted countries, transfer fees associated with 

these providers, and the method by which remittances are sent. The 

Internet site also directs users to a privately owned Web site to obtain 

information on current market exchange rates. One researcher we spoke 

with is in the process of developing a score card on remittance providers 

that will include information on fees, the estimated amount of commission 

a provider makes on the foreign exchange of the currency, the provider's 

presence in certain geographic areas in the United States and abroad, and 

the extent the company is involved in economic development in the 

receiving country. This researcher told us that providers have been eager to 

provide this information, as they feel they will be rated higher than their 

competitors. This researcher also believes this information will be helpful 

to consumers in making better informed decisions.

22United Kingdom Government’s Department for International Development, “Sending 

money home? A Survey of Remittance Products and Services in the United Kingdom,” 

(London 2005).
Page 44 GAO-06-204 International Remittances

Observations With the billions of dollars of remittances going from the United States to 

other countries, there has been an increased interest in serving this market, 

not only from the traditional MTOs but also from other types of remittance 

providers, including banks, credit unions, and Internet-only companies. 

These providers also continue to increase the variety of remittance 

products they offer, thereby giving some remittance senders more options 

to send money home. However, many of the banks and credit unions 

offering remittance services do so only for corridors to Latin America, 

leaving remitters sending to other parts of the world with fewer choices 

outside of the traditional MTOs. In their efforts to use remittances as a 

vehicle to bring immigrants, primarily those from Latin America, into the 

financial mainstream, the banks and credit unions offering remittance 

services, in some cases, offer the remittance sender an option that is less 

costly and more convenient than the traditional cash-to-cash products 

offered through MTOs. 

The banks and credit unions that have been successful in the remittances 

market have worked at the grassroots level with community groups and 

local immigrant businesses to educate the community about their products 

and services. They have also located their businesses in the communities 

where immigrants live and work and have employed tellers and agents who 

speak the language of those they are serving. Some federal agencies, such 

as FDIC and the Federal Reserve, have also undertaken initiatives to bring 

immigrant communities into the financial mainstream through financial 

education programs and the use of the Federal Reserve’s ACH system, 

through which banks and credit unions can offer a low-cost remittance 

product. These initiatives have been conducted in cooperation with 

Mexican government entities and have been principally targeted at 

Mexican immigrants. To date, efforts to extend these programs to other 

immigrant communities have been limited. Despite these efforts, banks and 

credit unions continue to have a relatively small share of the remittance 

market. The success that banks and credit unions have in effectively using 

remittance products as a means of attracting immigrants as customers will 

depend on how well they understand and address the factors that are 

important for remittance senders in choosing a provider, including cost, 

convenience, and trust. It may also require some federal agency efforts 

targeted at and working in cooperation with governments of other 

countries to extend initiatives like those aimed at Mexican immigrants to 

other immigrant groups.
Page 45 GAO-06-204 International Remittances

The cost to remittance senders of sending funds from the United States has 

decreased in recent years for Latin America and the Caribbean, in part 

because of increased competition in the market. Anecdotal evidence 

suggests that costs have not come down as significantly for other parts of 

the world, but there has been no detailed cost research on areas outside of 

Latin America and the Caribbean. Many of the locations for which prices 

are still considered high are those without a well-established financial 

infrastructure, thus making it more difficult for competition to be fostered 

through new or additional entrants into these remittance markets. 

Although community groups raised concerns in the past that remittance 

senders were not provided with information on the cost of sending funds, 

the providers we spoke with disclosed information on the total cost of the 

remittance transaction and remitters’ rights in the case of error resolution. 

These disclosures were made either during the transaction or, in the case of 

some bank products, at account opening and in monthly statements. 

Receipts for cash-to-cash transactions were generally provided in English, 

Spanish, and for one MTO specializing in the Philippines, in Tagalog. 

However, if remitters speak another language, they may not receive this 

information in that language. Moreover, the disclosure information 

provided for account-based remittance products was generally available 

only in English, which may make it difficult for non-English speakers to 

understand. In addition, with the wide variety of remittance products and 

with information presented at different times and not always in the 

remitter’s native language, it is difficult for the remitter to compare the 

different products and providers to determine the most convenient and 

cost-efficient method to send funds home. Some remittance providers who 

are interested in attracting immigrants have provided remitters with 

remittance disclosure information in their native language and others, such 

as the Mexican consumer protection agency, have also made efforts to 

provide immigrants with more information for them to use to make better 

informed remittance choices. These efforts serve as models for providers 

who want to serve this market and for others who want to ensure that 

remittance senders have access to timely and understandable information 

about the cost of sending funds.

We are sending copies of this report to the Department of the Treasury, the 

Bureau of Economic Analysis, the Federal Reserve Board, Federal Deposit 

Insurance Corporation, Office of the Comptroller of the Currency, Office of 

Thrift Supervision, National Credit Union Administration, United States 

Postal Service, and interested congressional committees. We will also make 
Page 46 GAO-06-204 International Remittances

copies available to others on request. In addition, this report will be 

available at no cost on our Web site at http://www.gao.gov. 

If you or your staff have any questions regarding this report, please contact 

me at (202) 512-2717 or jonesy@gao.gov. Contact points for our offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix IV.

Yvonne D. Jones

Director, Financial Markets

and Community Investment
Page 47 GAO-06-204 International Remittances

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Our report objectives were to examine (1) the methods of transmission 

available to remittance senders and the advantages and disadvantages of 

each, (2) the various costs to the remittance sender to use different 

methods, and (3) information remittance providers disclose to senders and 

the federal and state disclosure requirements.

For this report, we developed a set of structured questions and used them 

to interview officials at 8 money transfer operators (MTOs), 13 banks, 7 

credit unions, and 2 Internet-only remittance providers. These sources 

provided us with descriptive and documentary information on their 

operations and their different products. Of the 8 MTOs we interviewed, 4 of 

them were the largest providers in the United States (in terms of dollar 

volume of remittances) and provided remittance services to multiple 

countries.1

 The remaining 4 MTOs were medium-sized in terms of dollar 

volume of remittances, and 2 of these primarily served Latin America, 1 

primarily served the Philippines, and the other served multiple countries. 

Of the 13 banks we interviewed, 8 were large in terms of assets under 

management and were generally national in terms of locations, 1 was 

medium, and 1 was a small community bank.2

 The banks primarily served 

Mexico and some other Latin American countries, and 2 also served the 

Philippines, and 1 served India. Of the 7 credit unions we interviewed, 3 

were large in terms of assets under management, 1 was medium in size, and 

3 were small.3

 These providers spoke to us with the understanding that we 

would not publish their names in our report; therefore, we refer to each of 

them anonymously. We also interviewed two major credit card 

associations. 

To obtain information about the methods of transmission available to 

remittance senders, we interviewed officials at the United States Postal 

Service, the Board of Governors of the Federal Reserve as well as the 

Federal Reserve Banks of Atlanta, Chicago, and New York; the Federal 

1

Large, or tier 1 MTOs are those with remittance volumes of more than $700 million per year. 

Medium-sized MTOs are those with remittance volumes of $100 to $700 million per year. 

Small MTOs are those with remittance volumes of less than $100 million per year. 

2

Large banks were defined as those with more than $1 billion in assets. Medium-sized banks 

were those with assets of $250 million to $1 billion. Small banks are those with assets of 

$250 million or less.

3

Large credit unions are defined as those with more than $500 million in assets. Mediumsized credit unions were those with assets of $100 million to $500 million. Small credit 

unions are those with assets of $100 million or less.
Appendix I

Objectives, Scope, and Methodology

Page 48 GAO-06-204 International Remittances

Deposit Insurance Corporation (FDIC) in Chicago and Washington, D.C.; 

the Office of the Comptroller of the Currency; the Office of Thrift 

Supervision; and the National Credit Union Administration. In addition, we 

also interviewed officials from the U.S. Department of the Treasury’s Office 

of International Affairs, Office of International Banking and Securities 

Markets, Internal Revenue Service, and Financial Crimes Enforcement 

Network, as well as officials from the U.S. Department of State and the U.S. 

Agency for International Development. We also interviewed trade 

organizations representing money transmitters, banks, and credit unions. 

These included the American Bankers Association, the Credit Union 

National Association, the Independent Community Bankers of America, the 

National Money Transmitters Association, and the World Council of Credit 

Unions, Inc. In addition, we interviewed six experts in remittances and 

reviewed reports that they had developed. 

To identify the advantages and disadvantages of the different remittance 

providers and products, we asked our limited group of remittance 

providers why remittance senders may or may not use their services. We 

also asked the government officials, trade organizations, and experts we 

met with to describe the advantages and disadvantages of the different 

remittance providers and products. To gain an understanding of the factors 

that are important to remittance senders when choosing a remittance 

provider or product, we spoke with a limited group of immigrants from 

Africa, Europe, and Latin America, in two English as a second language 

classes in Arlington, Virginia, and a vocational training class in San 

Francisco, California. We also reviewed two reports that included 

interviews of actual remitters to Mexico and Latin America.4

 The reports, 

among other things, described the reasons why these remitters chose one 

remittance provider or product over another.

To obtain information on initiatives that are under way to bring immigrants 

into the formal banking system, we interviewed officials with FDIC’s New 

Alliance Task Force, the Federal Reserve Banks of Atlanta and Chicago, 

and the Mexican consulate in Chicago. 

4

The Pew Hispanic Center and the Multilateral Investment Fund,“Billions in Motion: Latino 

Immigrants, Remittances, and Banking,” (November 2002), Washington, D.C., and the 

Federal Reserve Board, “Banking on Remittances: Increasing Market Efficiencies for 

Consumers and Financial Institutions,” (April 2005).
Appendix I

Objectives, Scope, and Methodology

Page 49 GAO-06-204 International Remittances

To identify the cost to the remittance sender of different remittance 

products, we asked our select group of providers about the fees associated 

with their various products.5

 We specifically asked these providers to 

provide us with the transfer fees and any additional fees to send $300 to 

Mexico, the Philippines, Ecuador, and Nigeria. We reported costs on 

Mexico and the Philippines because they are two of the largest remittance 

recipient countries from the United States, and most providers we spoke 

with served both of these countries. Because of insufficient information 

from the providers we spoke with, we chose not to report transfer fees and 

additional fees for Ecuador and Nigeria. Some providers noted that the 

costs they gave us were the costs that most of their customers paid when 

sending $300 to these countries, but that they may vary depending on 

factors such the specific location from where the remittance was sent or 

where it was received. We excluded costs of traditional international wire 

transfers that some banks and credit unions offered because providers we 

spoke with told us few customers used this service to send remittances. 

During our interviews of these remittance providers, we also asked them 

how they set the exchange rate they provided to the remittance sender.

Further, in an effort to determine the difference in the exchange rates 

offered by different providers with that of a base exchange rate, such as 

one established by central banks, we conducted an online analysis of 

exchange rates offered by a select group of 6 remittance providers. We 

obtained the exchange rate for 5 of the 6 providers on the Internet, and 

called a 1-800 number to obtain this information for the remaining provider. 

Five of the providers offered a credit card-to-cash product, and one 

provider offered a dual ATM product for remittances to the Philippines and 

an account-to-account transfer and a cash-to-cash transfer product for 

remittances to Mexico. We specifically looked at the exchange rate to send 

$300 from the United States to Mexico, the Philippines, Peru, and Senegal. 

We chose these countries because of their location and the ability to obtain 

exchange rate information through the Internet for each country from at 

least 2 of these 6 providers. We obtained this information, as well as the 

exchange rate established by the central banks over a 35-day period, 

excluding weekends. Although most remittance senders do not use the 

Internet to remit funds, we wanted to understand the fluctuations in the 

difference between the exchange rates these 6 providers offer to 

remittance senders compared with a base rate, such as a central bank rate.

5

One credit union we spoke with did not actively promote its remittance product, and we did 

not include its cost figures in our analysis.
Appendix I

Objectives, Scope, and Methodology

Page 50 GAO-06-204 International Remittances

To obtain information on the total cost of a remittance transaction—the 

transfer fee and exchange rate spread—we also relied on information a 

leading expert on remittances had compiled over time on the total cost to 

remit funds from the United States to Latin America and the Caribbean. We 

asked the expert a number of questions about his methodology for 

collecting this information in order to gain an understanding of his 

methodology and assure ourselves that the data were sufficiently reliable 

for the purposes of this report.

To identify the information providers are disclosing to consumers on the 

cost of their transactions as well as their right to a refund and how to 

resolve errors, we used the set of structured questions to ask the 8 MTOs, 

13 banks, 7 credit unions, and 2 Internet-only remittance providers about 

what they provide to remittance senders during a remittance transaction.6

 

We also asked which disclosure regulations, if any, applied to their 

remittance products and we collected and reviewed documentation they 

provided to us such as receipts, brochures, and terms and conditions they 

provide to consumers. In an effort to compare the different state disclosure 

requirements for remittance providers, we reviewed state disclosure laws 

for MTOs from a sample of 15 states chosen for the size of their immigrant 

populations. We also conducted a review of the Federal Electronic Funds 

Transfer Act and its implementing regulation, Regulation E, which protects 

consumers engaged in electronic funds transfers, to understand its 

applicability to different remittance products. 

To understand whether additional information is needed to help customers 

make informed decisions, we asked government officials, experts, and 

representatives from community groups whether they believed customers 

used disclosure information to comparison shop and whether additional 

information was needed. Additionally, we asked the limited group of 

immigrants we met with questions regarding costs and disclosures. 

To obtain information on current efforts that are under way to provide 

some consumers with more aggregated information on the cost of 

remittances, we interviewed a remittance expert and an official from the 

Mexican consulate in Chicago and the Department for International 

Development in the United Kingdom. We also reviewed documentation and 

reports on these initiatives. 

6

One credit union we spoke with did not actively promote their remittance product, and we 

did not include the method in which they disclose costs and error resolution in our analysis.
Appendix I

Objectives, Scope, and Methodology

Page 51 GAO-06-204 International Remittances

Our work was performed in Arlington, Va.; Chicago, Ill.; New York, N.Y.; 

San Francisco, Calif.; and Washington, D.C., between December 2004 and 

October 2005 in accordance with generally accepted government audit 

standards. We requested and received technical comments on relevant 

sections of this report from the Bureau of Economic Analysis, the Federal 

Deposit Insurance Corporation, the Federal Reserve Bank of Atlanta, the 

National Credit Union Administration, the Internal Revenue Service, and 

the United States Postal Service.7

7

We requested comments from the Federal Reserve Bank of Atlanta because the Directo a 

Mexico program is run out of this reserve bank.
Page 52 GAO-06-204 International Remittances

Appendix II

Description of Products That Are Offered by 

Providers We Interviewed ApendxiI

Remittance providers offer a variety of products that can work in different 

ways. Table 7 provides a more detailed description of the products offered 

by the providers we interviewed. 

Table 7: Description of Remittance Products Offered by Providers We Interviewed

Provider type Product type Product description

MTOs

MTO 1 Cash-to-cash (next 

day)

Cash-to-cash transfer. Delivery is next day.

Cash-to-cash (same 

day)

Cash-to-cash transfer. Delivery is generally within 10 minutes. 

MTO 2 Cash-to-account Cash-to-account transfer. Funds are deposited directly into the recipient’s bank account. 

Funds are available to the recipient in 2 hours or less.

Cash-to-cash Cash-to-cash transfer.

Cash-to-cash (home 

delivery)

Cash-to-cash transfer delivered to the recipient’s home within 4 hours. Available in the 

Dominican Republic and certain destinations in Colombia, El Salvador, Guatemala, 

Nicaragua, and Peru. An additional fee may apply.

Cash-to-debit card/ 

stored value card

Cash transfer to a reloadable debit or stored value card branded by one of the major credit 

card companies. This service is available to Mexico and the Dominican Republic. 

MTO 3 Cash-to-cash/ cashto-accountCash-to-cash service involves a customer presenting U.S. dollars and having the recipient 

pick them up in the local currency. For cash-to-account product, the MTO has agreements 

with 14 banks in Mexico. 

MTO 4 Cash-to-cash (home 

delivery)

The sender goes into a branch and sends a remittance and the funds are delivered to the 

home of the recipient. Funds are delivered by a third-party distributor in the Philippines.

Cash-to-account Direct deposit is used for those who live in provincial areas in the Philippines and for which 

home delivery is not feasible. Money is sent in cash to a nearby bank account in the 

Philippines. The recipient gets a message to pickup his/her money. This is not an individual’s 

savings account, but an account for the bank.

Cash-to-cash (bank 

pickup)

This service allows customers to transmit U.S. dollars and have these deposited into a 

recipient’s savings account. A recipient must have an account with a bank in the Philippines 

to use this product. 

MTO 5 Account-to-cash/ 

account-to-account 

(Internet-only 

provider)

Sender sends funds through an existing bank account.

Credit card or PayPalto-cash or account 

(Internet-only 

provider)a

Sender sends funds through a credit card or an established PayPal account.

MTO 6 Cash-to-cash Cash-to-cash transfer.

Money order The money order is purchased at the MTO and sent to the recipient. 
Appendix II

Description of Products That Are Offered by 

Providers We Interviewed

Page 53 GAO-06-204 International Remittances

MTO 7 Cash-to-cash Cash-to-cash transfer. 

Cash-to-account The MTO partners with a bank that transfers the money for it. Customers pay in cash, the 

system captures the information, and the money is transferred into the recipient’s account.

Cash-to-cash (home 

delivery)

Cash-to-cash transfer that is then delivered to the recipient’s home. 

MTO 8 Cash-to-cash/ cashto-accountCash-to-cash wire transfer except in Mexico, El Salvador, or Brazil, where the money can be 

sent to a bank account. 

MTO 9 Credit card-to-debit 

card/ stored value 

card (Internet-only 

provider)

Money is sent from a credit card to a reloadable debit card or stored value card. The recipient 

can withdraw money at an ATM or point-of-sale terminal. 

MTO 10 Cash-to-cash/ cashto-accountCash-based transfer. Money can be picked up in cash or as a check at a participating bank or 

deposited into a designated bank account. 

Stored value card When sending to Mexico, the sender can choose to have the money deposited to a stored 

value card. This product is offered by a bank. However, the transfer takes place over the 

MTO’s network. 

Banks

Bank 1 Dual ATM The remittance recipient is sent a second ATM card. The sender must be an account holder 

at the bank to use this service.

Cash-to-cash (MTO) Cash-to-cash transfer initiated at an MTO that rents space from the bank. The customer does 

not need to have an account at the bank to use this service. 

Bank 2 Cash-to-cash/ cashto-account or accountto-accountCash or account-based transfer to bank locations in Mexico. The sender does not need to 

have an account to use the service but the recipient needs an account at the Mexican bank to 

receive money in an account.

Bank 3 Dual ATM The remittance recipient is sent a second ATM card. The sender must be a bank account 

holder to use the service. There is a daily withdrawal limit of $200.

Bank 4 Dual ATM The sender holds an interest-bearing account that the recipient can withdraw from. The 

exchange rate is set at the time of withdrawal. The sender must be a checking account holder 

at the bank. There is a daily withdrawal limit of $300. 

Bank 5 Dual ATM The sender opens the account and receives two ATM cards. One of the cards is sent to the 

family in the country of origin, separately providing the PIN number and directions as to how 

to access the account. Funds deposited in the account in the United States are directly 

transferred to family when they withdraw them at any ATM in the country of origin.

Stored value card This card allows a person to buy a prepaid MasterCard with a value that is limited to the dollar 

amount prepaid by the purchaser. The card is not reloadable. Neither the sender nor the 

recipient needs an account to use the product.

Account-to-account 

(Directo a Mexico for 

account holders)

Recipients must have a bank account at 1 of the 23 participating Mexican banks that are 

involved with the program. The exchange rate is applied by the recipient bank in Mexico, and 

it currently takes 24 hours for the funds to be received.

Cash-to-Account 

(Directo a Mexico for 

non-account holders)

Same as above but there is an additional charge for non-account holders. 

Stored value card The reloadable card is a prepaid MasterCard with a value limited to the dollar amount prepaid 

by the purchaser, but it can be reloaded by credit card on the bank Web site or by check in 

person at the bank. No account is needed. 

(Continued From Previous Page)

Provider type Product type Product description
Appendix II

Description of Products That Are Offered by 

Providers We Interviewed

Page 54 GAO-06-204 International Remittances

Bank 6 Account-to-account/ 

account-to-cash

Account-based transfer to Mexico only. If the recipient has an account in Mexico, the money 

can be transferred to that account. There is a limit of $1,500 per transfer. 

Bank 7 Account-to-account An account-to-account transfer that permits a remitter to send the local currency equivalent of 

up to $3,000 per day to a designated recipient’s account held with one of the remittance 

network member banks in Mexico, Guatemala, El Salvador, or India.

Cash-to-cash A cash-to-cash transfer to Mexico offered in conjunction with Bancomer Transfer Services. 

The product allows a remitter to send up to $3,000 per day to a recipient in Mexico, where 

funds can be picked up at any Bancomer branch. The remitter need not be an account holder 

to use this service. 

Account-to-ATM An account that permits the account holder to designate an authorized cardholder in the 

Philippines. The account holder receives a separate ATM card embossed with the authorized 

cardholder’s name. The authorized cardholder can withdraw the Philippine Peso equivalent of 

up to $400 per day from the account.

Bank 8 Account-to-account Allows for transfers from the United States to 22 other countries. All transfers must be from an 

account at the sending bank to an account held by the same bank.

Account-to-cash Allows for transfers from the United States to Mexico. The sender must be an account holder 

but the recipient can pick up cash at a corresponding bank in Mexico. 

Account-to-stored 

value card

This is a MasterCard branded card for Mexico and has low minimum balance and fees. The 

customer in Mexico can purchase a card from a Mexican bank and transfers can be made 

only from a bank account to the card. 

Bank 9 Cash-to-cash (MTO) The bank has partnered with a third-party vender to offer point-of-payment pickup at nonbank branches. This third party vendor is a money transfer operator. Money is available in 15 

minutes. 

Cash-to-account Same as the product directly above, but in Mexico the money can be deposited into an 

account. 

Bank 10 Account-to-stored 

value card

The sender transfers money from a bank to a stored value card. The card can be used at any 

Visa or Plus ATM in the world. 

Cash-to-stored value 

card

The sender transfers cash to a stored value card. The card can be used at any Visa or Plus 

ATM in the world. The sender is not an account holder, so there may be an additional charge. 

Cash-to-cash (MTO) Customers can send funds from the bank to any of the locations where the contracted MTO 

has a distribution network. 

Credit Unions

Credit Union 1 Account-to-cash/ 

cash-to-cash

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. 

Credit Union 2 Account-to-cash/ 

cash-to-cash

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. 

Credit Union 3 Account-to-cash/ 

cash-to-cash

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. 

Credit Union 4 Account-to-cash Account-based transfer. 

Credit Union 5 Account-to-cash/ 

cash-to-cash

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. 

Credit Union 6 Account-to-cash/ 

cash-to-cash

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. 

(Continued From Previous Page)

Provider type Product type Product description
Appendix II

Description of Products That Are Offered by 

Providers We Interviewed

Page 55 GAO-06-204 International Remittances

Source: GAO.

a

An Internet-based company that allows businesses or individuals to send and receive payments 

online. PayPal's service builds on the existing financial infrastructure of bank accounts and credit 

cards.

Credit Union 7 Cash-to-cash/ 

account-to-cash

Account-based or cash-based transfer sent via a corporate credit union.

Cash-to-cash/ 

account-to-cash 

Account-based or cash-based transfer. For an account-based transfer, the money is 

withdrawn from the sender’s credit union account. The transfer information is entered directly 

into the MTO Web site. 

U.S. Postal Service (USPS)

USPS International money 

order

The money order is purchased at USPS and sent to the recipient. 

Cash-to-cash (Dinero 

Seguro)

Cash-to-cash transfer.

(Continued From Previous Page)

Provider type Product type Product description
Page 56 GAO-06-204 International Remittances

Appendix III

Transfer Fees to Mexico and the Philippines 

for the Providers We Interviewed ApendxiI

We surveyed 28 providers and obtained detailed cost information on their 

remittance products from 24 of them, as shown below in table 8. The 

purpose of this table is to present a general gauge of pricing based on what 

officials told us. However, it may not be a comprehensive indication of 

pricing for all products or services offered by these providers to the 

specified receiving country. 

Table 8: Product Costs of Providers We Interviewed

Provider

type Product type

Transfer fee to send

$300 to Mexico

Transfer fee to send 

$300 to the Philippines

MTO

MTO 1 Cash-to-cash (minutes) $15.00 $16.00 

MTO 1 Cash-to-cash (next day) $9.99 $14.00 

MTO 2 Cash-to-cash/cash-to-account Information not provided Information not provided

MTO 3 Cash-to-cash or cash-to-account $9.00 NA a

MTO 4 Cash-to-cash (home delivery) NA $13.00 

MTO 4 Cash-to-cash (bank pickup) NA $9.00 

MTO 4 Cash-to-account NA $15.00 

MTO 5 Account-to-cash/account-to-account (Internetonly provider) $4.90 $10.50 

MTO 5 Credit card or PayPal-to-cash or account 

(Internet-only provider)

$9.10 $16.88 

MTO 6 Cash-to-cash $9.99 $14.00 

MTO 6 Money order Information not provided Information not provided

MTO 7 Cash-to-cash $9.50 $8.00 

MTO 7 Cash-to-account NA $13.00 

MTO 7 Cash-to-cash (home delivery) NA $13.00 

MTO 8 Cash-to-cash/cash-to-account Information not provided Information not provided

MTO 9 Credit card-to-debit card/stored value card $14.00 $14.00 

MTO 10 Cash-to-cash/cash-to-account/stored value card Information not provided Information not provided

Banks

Bank 1 Cash-to-cash (MTO) $10.00 NA

Bank 1 Dual ATM $5.00 NA

Bank 2 Cash-to-cash/cash-to-account/account-toaccount $9.99 NA

Bank 3 Dual ATM $10.00b NA

Bank 4 Dual ATM $1.50 NA

Bank 5 Directo a Mexico/account-to-account $2.50 NA
Appendix III

Transfer Fees to Mexico and the Philippines 

for the Providers We Interviewed

Page 57 GAO-06-204 International Remittances

Source: GAO. 

a

Not applicable (NA) means that officials we spoke with told us provider does not offer this service to 

the specified country or has never had experience sending a remittance to that country.

b

The provider told us it charges $5.00 to the account holder per withdrawal. However, customers can 

withdraw $200 each time. Thus, to withdraw $300, a customer would have to withdraw from the ATM 

twice and be charged a total fee of $10.00.

c

This bank also offers this product for free if the customer has a specific bundled set of services with 

the bank.

Bank 5 Directo a Mexico /cash-to-account $4.00 NA

Bank 5 Stored value card (reloadable) $2.00 $2.00 

Bank 5 Stored value card (non-reloadable) $3.00 $3.00 

Bank 5 Dual ATM $2.00 $2.00 

Bank 6 Account-to-cash or account transfer $0.00 NA 

Bank 7 Cash-to-cash $10.00 NA

Bank 7 Account-to-account $5.00 c NA

Bank 7 Account-to-ATM NA $5.00 c

Bank 8 Account-to-account $5.00 $8.00 

Bank 8 Account-to-cash $8.00 NA

Bank 8 Account-to-stored value card $5.00 NA

Bank 9 Cash-to-account $3.00 NA

Bank 9 Cash-to-cash (MTO) $8.00 NA

Bank 10 Cash-to-cash (MTO) $8.99 $25.00 

Bank 10 Stored value card (account holders) $8.00 $8.00 

Bank 10 Stored value card (non-account holders) $10.00 $10.00 

Credit Unions

Credit Union 1 Cash-to-cash or account-to-cash (MTO) $10.00 $20.00

Credit Union 2 Cash-to-cash or account-to-cash (MTO) $10.00 NA

Credit Union 3 Cash-to-cash or account-to-cash (MTO) $10.00 $10.00

Credit Union 4 Cash-to-cash NA NA

Credit Union 5 Cash-to-cash or account-to-cash (MTO) $10.00 $10.00

Credit Union 6 Cash-to-cash or account-to-cash (MTO) $8.00 $10.00

Credit Union 7 Cash-to-cash or account-to-cash (MTO) $8.00 $8.00

Credit Union 7 Cash-to-cash or account-to-cash (MTO) $16.00 $16.00

U.S. Postal Service (USPS)

USPS Cash-to-cash $10.00 NA

USPS International money order $3.25 NA

(Continued From Previous Page)

Provider

type Product type

Transfer fee to send

$300 to Mexico

Transfer fee to send 

$300 to the Philippines
Page 58 GAO-06-204 International Remittances

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact Yvonne D. Jones (202) 512-2717 or jonesy@gao.gov.

Acknowledgments In addition to the contact named above, Barbara I. Keller, Assistant 

Director; LaKeshia Allen; Gezu Bekele; Tania Calhoun; William R. Chatlos; 

Bruce L. Kutnick; Theresa Lo; Marc M. Molino; José R. Peña; David M. 

Pittman; and Rachel E. Seid made key contributions to this report.

(250228)
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